Treasury Cabinet Secretary John Mbadi has announced plans to further raise the Pay As You Earn (PAYE) tax exemption threshold from the proposed KSh 30,000 to KSh 32,800. The policy shift aims to ease financial pressure on lower-income workers by leaving them with higher take-home pay.
Speaking at The Eldoret National Polytechnic (TENP) in Uasin Gishu County, where he presided over the opening of the Mashujaa Day 2026 Economy (Finance) Thematic Week under the theme “An Economy for the People”, Mbadi confirmed that the government plans to table the amendment in Parliament.
The Exchequer chief revealed that the National Treasury reached an agreement with President William Ruto to honor the financial sacrifices made by Kenyan workers during the recent period of economic recovery.
“Those Kenyans who are earning 32,800 and below, why don’t we tell them, take all your salary and go; don’t pay taxes?'” That is an improvement from the 30,000 we talked about, isn’t it?” Mbadi said.
“So, at the end of this month, in the month of November, we are bringing that amendment to Parliament to tell those Kenyans that we appreciate the sacrifices.”
The revised figure builds on earlier policy discussions that had capped the proposed exemption limit at KSh 30,000. The Treasury intends to boost consumer purchasing power by allowing lower-paid employees to keep a larger share of their earnings.
“In the month of November, we are bringing that amendment to Parliament to tell those Kenyans that we appreciate the sacrifices, however little or however big you have made,” Mbadi added.
Under the existing tax framework, the initial KSh 24,000 of monthly taxable income attracts a 10 percent PAYE rate. Resident taxpayers currently benefit from a monthly personal relief of KSh 2,400, which offsets the income tax liability on that specific bracket.
The proposed tax relief requires parliamentary approval before becoming law. Existing PAYE tax rules will remain active until lawmakers debate, pass, and enact the formal statutory amendment.
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