President William Ruto has confirmed a proposal to raise Kenya’s minimum taxable income from KSh24,000 to KSh30,000, arguing that the move will offer real relief to millions of households struggling with the rising cost of living.
Speaking on Wednesday at State House while hosting UDA aspirants, Ruto said the tax changes form part of a broader plan to increase disposable income and protect working Kenyans from persistent financial pressure.
“We are now saying that any Kenyan who earns less than KSh30,000 will not pay any taxes. Any Kenyan earning up to KSh50,000 will see their taxes reduced from 30 per cent to 25 per cent,” Ruto said.
“One and a half million working Kenyans will not pay any taxes, and another 500,000 will have their taxes reduced to 25 per cent. This is how, progressively, we will manage the cost of living. Bottom Up was not just a slogan.”
Ruto’s remarks followed an announcement by Treasury Cabinet Secretary John Mbadi, who on Sunday revealed that the government plans to exempt Kenyans earning KSh30,000 or less per month from Pay As You Earn (PAYE). The proposal raises the current tax-free threshold, which only applies to salaried workers earning up to KSh24,000.
Mbadi said the reforms also target middle-income earners, with those earning between KSh30,001 and KSh50,000 set to benefit from a reduced PAYE rate of 25 per cent. The changes are expected to affect about 3.5 million salaried workers who shoulder a significant share of the country’s tax burden.
High-income earners would also get relief under the proposals, as the government plans to cap the top PAYE rate at 30 per cent, down from the current range of 32.5 to 35 per cent.
More than 1.7 million workers earning below KSh50,000 are projected to see lower tax deductions once the tax-free income threshold rises to KSh30,000.
Mbadi said the adjustments aim to create fairness in the tax system and leave more money in the hands of middle-income Kenyans.
“Those salaried Kenyans—3.5 million of them—are carrying the burden for almost everybody. It is not fair. We have decided to take this proposal to Bunge. I am not even waiting for the Finance Bill. Anyone earning below KSh30,000 in this country should pay zero tax. Zero,” Mbadi said during a public forum in Kiambu County.
The proposals have also gained backing from the Kenya Bankers Association (KBA). In its ten-point submission to the National Treasury ahead of the Finance Bill 2026, the association recommended exempting income below KSh30,000 from PAYE. It further proposed taxing income between KSh30,001 and KSh50,000 at 15 per cent, KSh50,001 to KSh100,000 at 20 per cent, KSh100,001 to KSh400,000 at 25 per cent, and any income above KSh400,000 at 30 per cent.
Currently, PAYE applies at zero per cent for the first KSh24,000, 25 per cent on the next KSh8,333, and 30 per cent on income up to KSh467,667. Workers earning above KSh500,000 pay 32.5 per cent, while those earning more than KSh800,000 face a 35 per cent rate.
Mbadi’s tax proposals are undergoing public participation and will face parliamentary debate once the Treasury tables the Tax Laws (Amendment) Bill, setting the stage for a major overhaul of Kenya’s PAYE system.
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