Kenya Personal Income Tax Guide 2026

Overview — Kenya Revenue Authority (KRA)

The Kenya Revenue Authority (KRA) administers all income tax under the Income Tax Act (Cap. 470). Kenyan tax residents are taxed on worldwide income; non-residents are taxed only on Kenyan-source income. Tax residency is determined by physical presence of 183+ days in a calendar year or having a permanent home in Kenya. Employees have tax withheld at source by their employer under the PAYE system. Self-employed individuals and business owners must file annual instalment tax returns through iTax.

PAYE Tax Brackets 2026

Kenya applies a progressive monthly bracket system with a top rate of 35%. For 2026, the monthly brackets are as follows:

• 10% — on the first KES 24,000 per month
• 15% — on the next KES 8,333 per month (KES 24,001–32,333)
• 20% — on the next KES 8,333 per month (KES 32,334–40,667)
• 25% — on the next KES 8,333 per month (KES 40,668–49,000)
• 30% — on the next KES 8,333 per month (KES 49,001–57,334)
• 35% — on income above KES 57,334 per month

These brackets mean that a taxpayer earning KES 100,000/month pays approximately KES 22,267 in PAYE before reliefs — an effective rate of ~22.3%. After personal relief of KES 2,400, the net tax is KES 19,867.

Personal Relief

Every resident individual is entitled to a personal relief of KES 2,400 per month (KES 28,800 per year). This relief is deducted from the tax calculated on taxable income. The relief is applied automatically by employers when computing monthly PAYE. Non-residents are not eligible for personal relief. The relief is non-refundable — if the tax calculated is less than KES 2,400, the relief is limited to the tax due.

Insurance Relief

Individuals who pay life insurance, education, or health insurance premiums may claim insurance relief of up to KES 5,000 per month (KES 60,000 per year). The relief is calculated at 15% of the premiums paid, subject to a maximum of KES 60,000 per year. The premiums must be paid to a registered insurer in Kenya. This relief is claimed in the annual tax return if not already factored into PAYE by the employer.

Affordable Housing Levy (AHL)

The Affordable Housing Levy (AHL) is a mandatory deduction at 3% of gross salary from both the employee and the employer (total 6%). The levy is capped at KES 5,000 per month per party for 2026, subject to the actual gross salary. AHL contributions are credited to the Affordable Housing Fund and are available for withdrawal upon retirement or for qualifying housing projects. The levy is collected by KRA alongside PAYE.

NSSF Contributions

National Social Security Fund (NSSF) contributions are mandatory at 6% of pensionable pay from both the employee and the employer, capped at KES 18,000 per month in pensionable pay (maximum contribution of KES 1,080 each per month). The NSSF provides retirement, disability, and survivor benefits. Contributions are deducted at source and remitted to the NSSF, separate from PAYE.

Employee Withholding (PAYE)

Employers are required to withhold income tax from employee salaries under the PAYE system. The employer calculates monthly tax based on gross salary, deducts personal relief, applies NSSF and AHL deductions, and remits the tax to KRA by the 9th of the following month via iTax. Employees receive a P9A form at the end of the tax year summarising total tax deducted. Employers must register for PAYE with KRA and file monthly PAYE returns. Failure to remit attracts penalties of up to 20% of the unpaid tax plus interest at 1% per month.

Filing Requirements

All individuals with income subject to tax must file an annual tax return through iTax by 30 June of the following year. Employees whose tax is fully withheld (PAYE) still file a simplified return to confirm their income and claim deductions. Self-employed individuals must file a detailed return with business income, expenses, and instalment tax paid. Late filing attracts a penalty of KES 2,000 or 5% of the tax due (whichever is higher), plus interest at 1% per month on unpaid tax.

FAQs

Do I need to file an annual return if I am a salaried employee?

Yes, all employees must file an annual tax return via iTax by 30 June, even if tax was fully withheld at source. The process is simplified for PAYE-only taxpayers.

Are bonuses and allowances taxable?

Yes, all cash payments including bonuses, commissions, housing allowances, and other benefits are taxable as employment income. Certain benefits such as employer pension contributions (up to limits) may be exempt.

Can married couples file jointly?

No, Kenya requires each individual to file separately. There is no joint filing or income-splitting for married couples.

What is the penalty for non-compliance?

Late filing attracts a penalty of KES 2,000 or 5% of tax due (whichever is higher). Late payment attracts interest at 1% per month. Evasion can result in penalties of up to 100% of the tax evaded plus criminal prosecution.

Disclaimer

This guide provides general information about Kenyan personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Kenyan tax advisor or the Kenya Revenue Authority for advice specific to your situation. InvestmentKit does not provide tax advice.