Treasury Cabinet Secretary John Mbadi has renewed hope for millions of salaried Kenyans after confirming that the government is still committed to implementing long-awaited Pay As You Earn (PAYE) tax relief, a move expected to leave more money in workers’ pockets and ease the cost-of-living burden.
The proposed reforms target low- and middle-income earners, with the government planning to exempt employees earning Sh 30,000 and below from paying PAYE.
If approved by Parliament, the tax-free threshold will increase from the current Sh 24,000 to Sh 30,000, delivering a significant financial boost to more than one million workers.
In addition to the exemption, Mbadi has also proposed reducing the PAYE rate for employees earning between Sh 30,000 and Sh 50,000 from 30% to 25%, allowing thousands more Kenyans to retain a larger share of their monthly salaries.
According to the Treasury, Kenya has over 3 million salaried workers, with nearly 1.5 million earning Sh 30,000 or less every month.
The proposed tax changes are expected to benefit about 1.7 million workers in total once implemented.
Government says the relief is still on course
Although many Kenyans expected the tax relief to be included in the 2026/27 Budget, the proposal did not appear in the Finance Bill, sparking concerns that the government had abandoned its promise.
However, Mbadi has insisted that the plan has not been shelved.
He explained that the Treasury was still finalising technical and revenue analyses before presenting the amendments to Parliament.
The CS maintained that both he and President William Ruto remain committed to delivering the relief, urging Kenyans to be patient as the process continues.
Why the Treasury wants to cut PAYE
The government argues that reducing taxes for lower-income earners will increase disposable income, allowing households to spend more on food, transport, education and other essentials.
Treasury officials believe stronger consumer spending could stimulate economic activity by increasing demand for goods and services, benefiting businesses while helping families cope with the rising cost of living.
At the same time, the government says it intends to improve tax compliance among individuals and businesses that currently underpay or evade taxes, helping offset revenue lost through the proposed PAYE relief.
A major promise under close watch
The proposed PAYE reforms have become one of the government’s most closely watched economic pledges, especially after widespread public opposition to tax increases in recent years and growing concerns over the high cost of living.
For now, millions of Kenyan workers will be waiting to see when the promised amendments are tabled in Parliament and, ultimately, when the tax relief begins reflecting in their monthly payslips.
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