PAYE: Expect to see some changes in your January payslip as employers enact the new Finance Act (2016)


New PAYE Rates

Monthly Taxable Pay (Ksh.) Annual Taxable Pay (Ksh.) Rate of Tax
Up to 11,180 Up to 134,164 10%
11,181 – 21,714 134,165 – 260,567 15%
21,715 – 32,248 260,568 – 386,970 20%
32,249 – 42,781 386,971 – 513,373 25%
Above 42,781 Above 513,373 30%

Employees earning a total income of Ksh.11,180.33 per month have also had their bonuses, overtime and retirement benefits exempted from tax. This was effected from 1st July 2016. Note that the tax exemption is based on the employee’s income excluding the aforementioned benefits.

The new monthly personal relief amounts to Ksh.1,280.  This translates to Ksh.15,360 per annum.

Old PAYE Rates

Monthly Taxable Pay (Ksh.) Annual Taxable Pay (Ksh.) Rate of Tax
Up to 10,164 Up to 121,968 10%
10,165 – 19,740 121,969 – 236,880 15%
19,741 – 29,316 236,881 – 351,792 20%
29,317 – 38,892 351,793 – 466,704 25%
Above 38,892 Above 466,704 30%

The old monthly personal relief amounted to Ksh.1,162. This translated to Ksh.13,944 per annum.

The new Pay As You Earn rates came into effect as from 1st January, 2017. This was as a result of the Finance Act 2016 which was signed into law by the president sometime in September 2016.

As can be deduced from the tables above, the income tax bands have been widened by 10 percent. Also notable is the amount of personal relief granted. Personal relief has been increased by Ksh.118 per month or Ksh.1,416 per annum.

Mr. Felix227 Posts

A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.


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