President William Ruto announced on October 20, 2026, a proposal to exempt Kenyans earning Sh32,333 or less per month from Pay As You Earn (PAYE) income tax. The measure, unveiled during Mashujaa Day celebrations in Eldoret, aims to increase disposable income for low-earning households alongside new land and digital tool subsidies.
The proposed tax shift would exempt an additional 362,846 formal sector workers from paying income tax. According to Treasury Cabinet Secretary John Mbadi, the plan involves raising the untaxed income threshold from Sh24,000 to Sh32,333. This change would trigger the removal of the Sh2,400 monthly relief currently available to all workers.
Official data indicates that 1.36 million Kenyans earned below Sh50,000 in 2024. This group represents 42.2 percent of the 3.21 million formal sector employees. Among these employees, 104,206 earned a monthly gross salary between Sh20,000 and Sh29,999, while 36,955 individuals made up to Sh19,999 per month.
Shifting the Tax Burden to High Earners
While low-income workers see relief, those earning over Sh50,000 will pay more to offset the resulting revenue losses. Treasury estimates indicate that employees earning between Sh32,334 and Sh50,000 will see their income tax drop by up to Sh596. However, workers earning Sh60,000 are expected to pay an extra Sh473, while those earning Sh100,000 and Sh200,000 will see increases of Sh892 and Sh3,867, respectively.
The current tax structure remains tiered. Top rates of 32.5 percent and 35 percent apply to higher earnings, introduced via the Finance Act 2023. By the end of 2024, the number of workers taking home more than Sh100,000 per month stood at 397,541, accounting for 12 percent of the total workforce.
| Monthly Earnings | Estimated Tax Impact |
|---|---|
| Below Sh32,333 | Exempt from PAYE |
| Sh32,334 to Sh50,000 | Reduction of up to Sh596 |
| Sh60,000 | Increase of Sh473 |
| Sh100,000 | Increase of Sh892 |
| Sh200,000 | Increase of Sh3,867 |
Land Transfers and Digital Access Subsidies
The tax relief is part of a broader four-point economic package. President Ruto announced plans to exempt land transactions valued at Sh1 million or less from stamp duty. For higher-value properties, the government intends to implement a graduated payment system to lower the cost of acquisition and transfer.
To lower the cost of digital tools, the administration proposes removing the 25 percent import duty on mobile phones. The President described these devices as essential gateways to banking, education, and employment for young people entering the digital economy. He stated that reducing the cost of mobile phones would bring digital economic opportunities within reach of more people.
Banking Sector Push for Universal Cuts
The Kenya Bankers Association (KBA) has challenged the government’s focus on only low-income earners. KBA CEO Raimond Molenje is pushing for a five-percentage-point reduction in PAYE across all income brackets, arguing that a universal cut would better restore public trust in government. On October 22, Molenje stated, As we make Pay As You Earn adjustments, let’s consider how we can help Kenyans restore trust in their government.
For a worker earning Sh50,000 monthly, the KBA’s plan would result in an additional Sh2,244 in monthly take-home pay, or Sh26,955 annually.
November Parliamentary Timeline
These proposals are not yet law. Cabinet Secretary John Mbadi confirmed that the government intends to introduce an amendment to Parliament in November to formalise the exemption. The final implementation depends on the legislative process.
While the President’s current target is Sh32,333, the threshold has shifted during the planning phase. Mbadi noted that the limit was previously discussed at Sh30,000 before being raised to the current proposed figure. Mbadi posed, Because the economy has shown signs of improving, those Kenyans who are earning Ksh32,800 and below- why don’t we tell them to take all their salary and go?
noting that this was an improvement from the previous Sh30,000 figure.