Kenya is set to introduce major income tax relief for low-income earners following a new government proposal that seeks to exempt workers earning up to Sh30,000 per month from Pay-As-You-Earn (PAYE) tax. The proposal marks a shift from the current tax structure, where the tax-free threshold stands at Sh24,000, and is part of broader efforts to ease the cost of living for ordinary Kenyans.Under the proposed changes, employees whose monthly income does not exceed Sh30,000 would no longer be required to pay income tax. This means workers in this bracket would take home their full gross pay, significantly increasing their disposable income. The government argues that rising food prices, transport costs, and household expenses have placed enormous pressure on low-income earners, making tax relief necessary.
The proposal also introduces adjustments for workers earning slightly above the Sh30,000 threshold. While they would not be fully exempt, they are expected to benefit from reduced tax rates compared to the current system. The intention is to reduce the tax burden on lower and middle-income earners while maintaining revenue collection from higher income brackets.Government officials have stated that the move is aligned with the administration’s bottom-up economic agenda, which prioritises protecting low-income households and supporting consumption at the grassroots level. By allowing millions of workers to retain more of their earnings, the government hopes to stimulate spending, support small businesses, and strengthen overall economic activity.
However, it is important to note that the tax exemption for those earning Sh30,000 is not yet law. The proposal must be presented to Parliament, debated, and approved before it can take effect. Public participation is also required as part of the legislative process, giving citizens an opportunity to share their views on the changes.If approved, the new tax threshold would benefit a large number of salaried workers, particularly those in entry-level jobs, the informal sector, and service industries. Employers would also be required to update payroll systems to reflect the new PAYE structure once the law comes into force.For now, workers earning Sh30,000 or below will continue to be taxed under the existing rules until Parliament finalises and passes the amendments. Kenyans are therefore advised to follow developments closely, as the proposal represents one of the most significant income tax relief measures in recent years.
