The 2026 monthly bands
PAYE is graduated. For monthly taxable income: the first KES 24,000 is taxed at 10%; the next KES 8,333 at 25%; income from KES 32,334 up to KES 500,000 at 30%; from KES 500,001 to KES 800,000 at 32.5%; and everything above KES 800,000 at 35%. These bands were set by the Finance Act 2023 and remain in force in 2026.
What comes off before tax
Taxable income is not gross pay. Deduct first: the employee's NSSF contribution, their SHIF contribution, their Affordable Housing Levy contribution (both deductible since December 2024), and qualifying registered pension contributions within the statutory cap. Only then apply the bands.
Reliefs
Every resident employee gets personal relief of KES 2,400 per month (KES 28,800 per year), subtracted from the tax computed on the bands. Insurance relief of 15% of premiums (capped at KES 5,000 per month) applies to qualifying life, health, and education policies.
Filing and payment
The employer files and pays by the 9th of the following month on iTax through the unified payroll return. Late filing costs the higher of 25% of the tax due or KES 10,000; late payment adds a 5% penalty plus 1% interest per month outstanding.