President William Ruto has proposed exempting Kenyans earning KSh32,333 or less per month from Pay As You Earn (PAYE) tax in a move aimed at increasing the take-home pay of low-income workers.
Speaking during the Mashujaa Day celebrations at Kipchoge Keino Stadium in Eldoret, Uasin Gishu County, on Tuesday, October 20, Ruto said the proposal was part of government measures to ease the cost of living.
“We have prepared a proposal to exempt Kenyans earning KSh32,333 per month or less from paying Pay As You Earn income tax,” Ruto said.
The President said the proposed relief would leave workers with more money to meet their daily needs, including food, transport and education expenses.
“For workers on modest incomes, every shilling saved means more money for food, transport, school expenses, and the needs of their families,” he added.
The proposal would change the existing PAYE system, under which eligible employees pay income tax based on their taxable earnings, with resident taxpayers receiving personal relief to reduce their tax liability.
However, the exemption will not take effect immediately. The government will need to pursue the necessary legal changes before employers can stop deducting PAYE from workers covered by the new threshold.
The announcement comes days after National Treasury Cabinet Secretary John Mbadi said the government planned to introduce an amendment in Parliament in November to exempt employees earning KSh32,800 or less from PAYE.
Mbadi said the revised proposal was an improvement on an earlier plan to exempt workers earning up to KSh30,000 monthly.
The difference between the two figures leaves questions about the final threshold the government intends to adopt. The proposed legislation is expected to clarify the applicable limit and how the exemption will be implemented.
Ruto’s announcement was part of a wider package of proposed measures targeting household expenses and the cost of doing business.
The President also announced plans to exempt land transactions valued at KSh1 million or less from stamp duty and pursue the removal of import duty on mobile phones, subject to the necessary legal processes.
The proposed PAYE relief is expected to benefit lower-income employees if approved and implemented, although the actual savings will depend on the final legislation and the applicable tax rules.