The National Treasury has U-turned on its promise to introduce a Tax Laws (Amendment) Bill before the Finance Bill 2026 to effect Pay As You Earn (PAYE) band adjustments.
Treasury CS John Mbadi, while appearing before the Budget and Appropriations Committee of the National Assembly, said the decision was informed by the proximity to the Finance Bill & therefore the decision was taken to simply consolidate the two.
Mbadi noted that Treasury has decided to combine the Tax Laws (Amendment) Bill with the Finance Bill 2026, meaning all proposed tax changes—including PAYE adjustments—will now be included in one single legislative document.
Finance Bill 2026 to Include PAYE Changes After Treasury Merges Tax Laws Bill
According to Mbadi, measures contained in the Tax Laws (Amendment) Bill were projected to yield Ksh 57.0 billion in tax and will now be part of the Finance Bill 2026.
The Ministry was to present the Tax Laws Amendment Bill before Parliament for approval of the reforms ahead of the publication of the Finance Bill 2026.
“The National Treasury has also prepared some tax amendment proposals aimed at broadening the tax base and sealing leakages, with an estimated yield of Ksh 57 billion,” Mbadi said.
“However, we are turning this over as we have only a few weeks to the Finance Bill. Bringing in some tax law adjustments at this time feels too close to the Finance Bill. We will instead review, consolidate, and bring them together in the Finance Bill for consideration by the August House.”
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Kenyans Earning Below Ksh.30,000 to Get PAYE Relief
This comes after Mbadi announced the government’s plan to exempt over 1.5 million employed Kenyans earning below Ksh. 30,000 from paying Pay As You Earn tax.
He admitted that recent tax measures and statutory deductions have reduced the net pay of many workers, especially those in lower income brackets.
“Anybody earning Ksh. 30,000 and below in Kenya should not pay PAYE. You pay zero. I earn a million shillings, let the government come for my fellow members of parliament and me,” Mbadi said in February.
Also Read: How the Payslip Will Look for Kenyans Earning KSh 30,000 After PAYE Is Scrapped
According to the National Exchequer, about 3,650,165 are salaried and 1.5 earn Ksh. 30,000 and below.
CS Mbadi added that the Bill will also include a 5% PAYE reduction proposal for over 244,000 Kenyans earning between Ksh. 30,000 and Ksh. 50,000.
Currently, the PAYE tax cap affects Kenyans earning as low as Ksh. 24,000. Experts argue that easing the financial pressure on salaried workers could revive consumption and stabilise the economy, which is weighed down by weak household demand.
