Treasury Cabinet Secretary John Mbadi has assured salaried Kenyans that the government’s plan to reduce PAYE tax cuts remains firmly on course, even though the Finance Act 2026 came into effect on July 1 without the anticipated changes to Pay As You Earn (PAYE).
Speaking during an interview on Citizen TV on Wednesday evening, Mbadi said the Treasury would immediately begin discussions on reviewing the PAYE structure, maintaining that the government is committed to delivering on President William Ruto’s promise to ease the tax burden on workers.
“The suggestion about PAYE came from the government. That is one of the assignments I am going to start on immediately, on the discussion on how to reduce taxes on PAYE,” Mbadi said.
He added that Kenyans should expect the promised tax relief to be implemented.
“We are going to give tax relief, take it to the bank. The President has spoken about it, John Mbadi has spoken about it. It is not that we are enjoying Kenyans; we are going to make sure it is actualised,” he said.
His remarks come just a day after the Finance Act 2026 officially took effect, prompting questions from many salaried employees over why the promised PAYE tax cuts were not included in the legislation.
The government has maintained that the omission does not signal a change in policy but is instead a result of the legislative timeline. According to officials, the Finance Bill had already been prepared and tabled in Parliament before President Ruto announced plans to review the PAYE structure.
Last month, National Assembly Majority Leader Kimani Ichung’wah reassured workers that the proposed reforms were still being pursued despite not appearing in the Finance Bill 2026.
“I can assure you that the Treasury, the Finance Committee and those of us in the House leadership are working on that. I can assure you that the President cannot make a pronouncement in vain,” Ichung’wah said.
As part of his agenda early this year, President Ruto instructed the National Treasury to come up with proposals that would exempt individuals earning a gross salary of up to KSh30,000 per month from PAYE.
In addition, the proposal to reform the PAYE system has received endorsement from the Kenya Bankers Association (KBA). As part of their demands for the revision of Kenya’s income tax system, KBA has put forward various proposals, including increasing the monthly personal tax relief to KSh3,000 from the current KSh2,400, and introducing a five-band income tax system.
Under the new five bands’ tax regime, the lowest tax rate of 10% will apply to incomes of up to KSh30,000, compared to the current tax band rate of 10 percent to KSh24,000.
According to KBA, the current PAYE regime makes the burden of tax payment difficult for middle-income earners, as they are moved to higher bands at a very early stage.
ICPAK is also calling for reform of the income tax system in order to help the Kenyan worker retain more money after paying income tax.