How to Calculate PAYE in Kenya: Tax Bands, Reliefs and a Worked Example

What is PAYE?

PAYE is the system through which employers deduct income tax from employees’ earnings before paying them, then remit that tax to KRA. It applies to all employment income, including salaries, wages and taxable allowances.

Each pay period you compute gross pay, apply statutory and agreed deductions, then calculate tax on the resulting chargeable pay using the KRA tax bands below.

Current KRA PAYE tax bands (monthly)

These are the monthly bands in effect for chargeable pay. Chargeable pay is gross pay less allowable deductions such as registered pension contributions and other statutory deductions that KRA recognizes.

• ✓Up to KES 24,000: taxed at 10%
• ✓KES 24,001 – KES 32,333: taxed at 25%
• ✓Above KES 32,333: taxed at 30%
• ✓Personal relief reduces every employee’s tax by KES 2,400 per month

Reliefs that reduce the PAYE you pay

• ✓Personal relief: KES 2,400 every month for all resident individuals.
• ✓Insurance relief: up to 15% of qualifying premiums, capped under the law.
• ✓Affordable Housing relief: 15% of an employee’s housing levy contribution, applied where the employee qualifies.
• ✓Always confirm eligibility and current caps on the KRA iTax portal.

Worked example: chargeable pay of KES 60,000 per month

This example assumes no insurance or housing relief. Every additional relief must be applied within its legal cap, which is why payroll software is far safer than manual Excel calculations.

• ✓First KES 24,000 × 10% = KES 2,400.00
• ✓Next KES 8,333 × 25% = KES 2,083.25
• ✓Remaining KES 27,667 × 30% = KES 8,300.10
• ✓Gross tax = KES 12,783.35
• ✓Less personal relief = KES 2,400.00
• ✓Net PAYE payable = KES 10,383.35

Let saloPoint calculate PAYE automatically

saloPoint applies the current KRA tax bands, personal relief, insurance relief and housing relief automatically for every employee, every pay period. It also prepares your P9, P10 and P10A tax reports and monthly PAYE returns, so you can spend your time on the business instead of recalculating tax.