As the Finance Bill 2026 is almost ready to be read, Kenyans will benefit from the new proposal to safeguard death benefits paid to dependents of deceased pensioners from taxation. The move will relief for households that struggle with financial uncertainty following the loss of a loved one.
The current benefits paid to spouses, children or other nominated beneficiaries are not taxed. The Finance Bill proposes an amendment to Clause 20, Paragraph 53 of the first schedule to the Income Tax Act to explicitly exempt benefits from income tax.
The announcement comes at a time when many Kenyans are facing hardship due to the rising cost of living, as it will benefit many households in the country.
If approved, the bill will provide certainty and make the tax system understandable, fairer and more reliable to all. This also reflects the government’s commitment to balancing revenue collection with social protection.
This will also help pension schemes operate more transparently while giving defendents confidence that their entitlements are secure.
