At a glance
- PAYE runs from 10% to 35% of taxable pay, less a personal relief of KES 2,400 a month. Proposed cuts were left out of the Finance Act 2026.
- NSSF Phase 4 has applied since February 2026: 6% each from employee and employer on pay up to KES 108,000, a maximum of KES 6,480 each.
- SHIF takes 2.75% of gross pay, with a minimum of KES 300 and no cap.
- The Affordable Housing Levy takes 1.5% of gross pay from the employee, matched by the employer.
- PAYE, NSSF, SHIF and the Housing Levy are due by the 9th of the following month.
The five deductions at a glance
| Deduction | Rate | Who pays |
|---|---|---|
| PAYE | Graduated bands from 10% to 35% of taxable pay, less KES 2,400 personal relief a month | Employee, withheld by the employer |
| NSSF | 6% of pensionable pay up to KES 108,000, a maximum of KES 6,480 a month | Employee and employer, matched |
| SHIF | 2.75% of gross pay, minimum KES 300, no cap | Employee, withheld by the employer |
| Affordable Housing Levy | 1.5% of gross pay, no cap | Employee and employer, matched |
| NITA levy | KES 50 per employee per month | Employer |
Every employer also needs work injury insurance under the Work Injury Benefits Act. It is a premium paid to an insurer, not a payroll deduction.
PAYE bands for 2026
The monthly bands are unchanged since July 2023. The Finance Act 2026 took effect on 1 July 2026 without the PAYE cuts that had been discussed, including a proposal to exempt earnings up to KES 30,000 a month. The Treasury has said a review is under way, so watch for an amendment.
| Monthly taxable pay | Rate |
|---|---|
| First KES 24,000 | 10% |
| Next KES 8,333 (to KES 32,333) | 25% |
| Next KES 467,667 (to KES 500,000) | 30% |
| Next KES 300,000 (to KES 800,000) | 32.5% |
| Above KES 800,000 | 35% |
Resident employees then deduct a personal relief of KES 2,400 a month from the tax calculated.
What comes off before tax
NSSF contributions, SHIF and the employee's Housing Levy are deducted from gross pay before PAYE is calculated. KRA has confirmed that SHIF and the Housing Levy are deductible, which changed payroll calculations from the end of 2024. Payrolls still computing PAYE on gross pay overstate tax.
NSSF in 2026: Phase 4
NSSF contributions are being phased in under the NSSF Act, 2013. Since February 2026, Phase 4 has applied:
- Tier I covers pensionable pay up to the lower earnings limit of KES 9,000: 6% of KES 9,000 is KES 540.
- Tier II covers pay between KES 9,000 and the upper earnings limit of KES 108,000: 6% of KES 99,000 is KES 5,940.
- The employee's maximum is therefore KES 6,480 a month, and the employer matches it.
Anyone still using the Phase 3 upper limit of KES 72,000 is under-deducting for every employee earning above it.
A worked example: KES 150,000 gross a month
Employee deductions
| Gross pay | 150,000.00 |
| NSSF (Tier I 540 + Tier II 5,940) | 6,480.00 |
| SHIF (2.75% of 150,000) | 4,125.00 |
| Affordable Housing Levy (1.5% of 150,000) | 2,250.00 |
| Taxable pay (150,000 less 12,855) | 137,145.00 |
| Tax at 10% on the first 24,000 | 2,400.00 |
| Tax at 25% on the next 8,333 | 2,083.25 |
| Tax at 30% on the remaining 104,812 | 31,443.60 |
| Tax before relief | 35,926.85 |
| Less personal relief | 2,400.00 |
| PAYE | 33,526.85 |
| Net pay (150,000 less 6,480, 4,125, 2,250 and 33,526.85) | 103,618.15 |
Employer's monthly cost
| Gross pay | 150,000.00 |
| Employer NSSF (matched) | 6,480.00 |
| Employer Housing Levy (1.5% of 150,000) | 2,250.00 |
| NITA levy | 50.00 |
| Total monthly cost, before work injury insurance | 158,780.00 |
All figures in Kenya shillings. The example assumes a resident employee with no other reliefs, allowances or benefits in kind.
The monthly deadline
PAYE, NSSF, SHIF and the Housing Levy are all due by the 9th of the month following the payroll month. The NITA levy is paid monthly, and work injury insurance runs as an annual policy. Late payment attracts penalties and interest, and unresolved arrears can block the company's tax compliance certificate.
Errors we see most often
- Using the Phase 3 NSSF limits after February 2026.
- Calculating PAYE on gross pay without first deducting SHIF and the Housing Levy.
- Forgetting the employer's half of NSSF and the Housing Levy when budgeting a hire.
- Missing the 9th because one remittance runs through a different system from the others.
Checked against the sources below on 12 October 2026. This guide is general information, not legal or tax advice. Rules change with each Finance Act and gazette notice, so confirm the current position before you act, or ask us.
Sources
- Serrari Group: PAYE calculator Kenya 2026, monthly bands
- Kenyans.co.ke: CS Mbadi assures Kenyans PAYE tax cuts are still on track
- Enerpize: Kenya statutory payroll rates (NSSF Phase 4, SHIF, Housing Levy deductibility)
- FaidiHR: Payroll compliance in Kenya, 2026
- Multiplier: Cost of hiring in Kenya 2026
- EY: Kenya enacts tax changes under Finance Act, 2023