National Treasury Cabinet Secretary John Mbadi has outlined the next steps in the government’s plan to ease the Pay As You Earn (PAYE) tax burden on low-income workers, saying nationwide public participation will be conducted before the proposed changes are taken to Parliament.
Speaking during the FY2027/28 Medium-Term Budget Preparation Process at the Kenyatta International Convention Centre (KICC) on Tuesday, July 22, Mbadi said the Treasury would spend the month of August collecting views from Kenyans on proposals aimed at reducing PAYE deductions from workers’ salaries.
Mbadi Confirms PAYE Tax Relief Bill to Be Tabled in SeptemberÂ
He said the public consultations would culminate in a report to President William Ruto before legislation is introduced in Parliament.
The Cabinet Secretary said the government had not abandoned its earlier proposal despite speculation that the plan had been shelved.
“I know there has been a lot of concern about payslips. Next month, I will embark on a nationwide public engagement on how to reduce the tax burden on workers’ payslips,” Mbadi said.
“Some of you thought we had shelved that idea, but we have not. Throughout the month of August, we will conduct public participation because we have developed a proposal, and other stakeholders have also submitted their own proposals.”
Mbadi said one of the Treasury’s proposals is to exempt the first KSh30,000 earned every month from PAYE.
He said the government is also considering reducing the tax burden on the next KSh20,000 of their income (between KSh30,001 and KSh50,000) would be taxed at a lower rate than the current system.
According to Mbadi, other stakeholders have submitted alternative proposals, including a five per cent reduction in PAYE across all income bands.
Mbadi stated that all the proposals submitted by various stakeholders will be subjected to rigorous public participation before a final decision is reached.
“Our proposal is to make the first KSh30,000 tax-free and reduce the tax burden on the next KSh20,000. Other stakeholders have proposed a five per cent tax reduction across the board. We want to consolidate all these proposals and present them to Kenyans for their views,” he said.
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Public Participation to be Held in August
The Treasury will collect views from workers, employers, professional bodies and other stakeholders before settling on the final proposal.
Mbadi said the consultations would be completed by the end of August.
“By the end of August, I will have travelled across the country to collect public feedback. We have agreed with the President that once I submit the report, we will introduce the necessary legislation in September so that Kenyans can begin to enjoy some relief on their payslips,” he said.
The proposal comes after the Treasury left out the promised relief for salaried workers in the Finance Bill 2026, even as employees continue to face rising statutory deductions and pressure on household incomes.
The push for tax relief comes as salaried workers grapple with increased deductions from the Social Health Insurance Fund (SHIF), the Affordable Housing Levy and higher National Social Security Fund (NSSF) contributions, which have further widened the gap between gross and net pay.
PAYE Relief Proposal Tests Government’s Revenue Balancing Act
Parliament’s Finance and National Planning Committee Chairperson Kuria Kimani told stakeholders that Treasury simulations showed raising the minimum taxable income threshold from KSh24,000 to KSh30,000 would result in a KSh35 billion revenue shortfall.
The projection highlights the challenge facing the government as it weighs calls for lower taxes against concerns over declining revenue and fiscal pressures.
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The proposals for PAYE cut were shelved, with officials citing revenue constraints, including reduced fuel VAT collections following tax cuts on petroleum products amid the Iran conflict.
If approved by Parliament, the proposed changes would ease the PAYE burden for thousands of low-income workers, especially those earning below KSh30,000 per month.
The measures are part of broader tax reforms aimed at increasing workers’ disposable income while ensuring the government maintains revenue needed to fund public programmes.
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