Understanding PAYE in Kenya
A complete guide to Pay As You Earn tax for employees in Kenya.
What is PAYE?
In Simple Terms
PAYE (Pay As You Earn) is income tax that your employer deducts from your salary every month before paying you. Instead of paying a large tax bill at the end of the year, you pay a little bit each month. Think of it like paying for something in installments—but for taxes.
Official Definition (KRA)
PAYE is a system of income tax collection where tax is deducted by the employer from the employee's salary or wages at the time of payment and remitted to KRA by the 9th day of the following month. It applies to all employment income including salaries, wages, bonuses, allowances, and benefits-in-kind.
PAYE is the most common form of income tax in Kenya. If you're employed and receive a regular salary, your employer is required by law to deduct PAYE from your pay and send it to the Kenya Revenue Authority (KRA) on your behalf.
How is PAYE Calculated?
PAYE is calculated using progressive tax rates. This means the more you earn, the higher percentage of tax you pay—but only on the amount above each threshold.
2024 Tax Bands
Worked Example
Let's say you earn KES 50,000 per month (KES 600,000 per year):
Tax Reliefs and Exemptions
Tax reliefs reduce your taxable income, which means you pay less tax. Here are the main reliefs available:
Personal Relief
KES 2,880 per month (KES 34,560 per year)
Available to all taxpayers. Automatically applied by your employer.
Insurance Relief
15% of insurance premiums (up to KES 5,000 per month)
For life insurance, education policies, and health insurance premiums. Maximum relief is KES 60,000 per year.
Mortgage Interest Relief
15% of mortgage interest (up to KES 300,000 per year)
For interest paid on a mortgage for your main residence.
Owner-Occupier Interest Relief
15% of interest (up to KES 300,000 per year)
For interest on loans used to purchase or improve your main residence.
Filing Requirements
Important Deadlines
- Monthly PAYE: Due by the 9th of the following month
- Annual Return (ITR): Due by June 30th each year
- P9 Certificate: Your employer must provide this by January 31st
While your employer handles monthly PAYE deductions, you're still responsible for filing your annual tax return (ITR) by June 30th. This allows you to:
- Claim additional reliefs you may have missed
- Declare other income sources
- Get a refund if you overpaid
- Pay any additional tax if you underpaid
Common Questions
What if my employer doesn't deduct PAYE?
Your employer is legally required to deduct PAYE. If they don't, you're still responsible for paying the tax. Report this to KRA and consider finding a new employer who complies with tax laws.
Can I reduce my PAYE?
Yes, by claiming all available reliefs (insurance, mortgage interest, etc.). Make sure your employer has all the necessary documents to apply these reliefs to your monthly deductions.
What happens if I change jobs?
Your new employer will need your P9 certificate from your previous employer. This shows how much tax you've already paid in the year, ensuring you don't pay tax twice on the same income.
Do I need to file if my employer deducts PAYE?
Yes! Even if your employer handles PAYE, you must still file your annual return by June 30th. This is a legal requirement and allows you to claim additional reliefs or declare other income.
Calculate Your PAYE
Use our calculator to see exactly how much PAYE you should be paying.