PAYE Calculator Kenya 2026

The PAYE Calculator

This PAYE (Pay As You Earn) Calculator helps you estimate the income tax deducted from employment income in Kenya. PAYE is deducted by an employer from an employee's taxable emoluments and remitted to the Kenya Revenue Authority (KRA). For most employees, PAYE is the biggest "tax" item on the payslip, and it is calculated using progressive tax bands, meaning different parts of your income are taxed at different rates.

The goal of this page is not just to give a number. It's to help you understand: what counts as taxable pay, what can reduce taxable pay (allowable deductions), what reduces tax after it's calculated (reliefs), and why two people with the same gross pay can still end up with different PAYE depending on deductions, benefits, and reliefs.

What is PAYE (in plain language)?

PAYE is income tax on employment income. If you are employed, you normally do not pay income tax by yourself each month. Your employer calculates PAYE, deducts it from your salary, and sends it to KRA on your behalf. You receive the remainder as your net pay (after other deductions like NSSF, SHIF, Housing Levy, and any voluntary deductions).

PAYE is calculated on your taxable employment income, not necessarily your "basic salary" alone. Taxable employment income can include wages, salaries, commissions, bonuses, overtime, cash allowances, gratuity, and the taxable value of certain non-cash benefits. In Kenya, some non-cash benefits become taxable when their value exceeds specific thresholds.

What counts as taxable employment income?

Most cash payments related to employment are taxable unless the law specifically excludes them. Common examples:

• Basic salary / wages (your core employment pay).
• Cash allowances such as commuter allowance, cash house allowance, entertainment allowance, and similar recurring payments.
• Bonuses, commissions, and overtime (often the reason PAYE spikes in some months).
• Taxable non-cash benefits, for example: company car benefit, employer-provided housing benefit, or preferential loan benefit (when loan interest is below market).

A practical way to think about it: if a payment is a reward for employment and it increases your economic benefit, it's likely taxable unless there is a clear exemption or limit.

Progressive tax bands (how Kenya taxes your income)

Kenya uses progressive tax bands for individuals. This means: you do not pay one single rate on your entire income. Instead, you pay 10% on the first band, then 25% on the next portion, then 30%, then 32.5%, then 35% on the highest portion (if your taxable pay reaches that level).

This is why the "marginal rate" (the rate on your last shilling of taxable income) can be higher than your "effective rate" (your overall PAYE divided by taxable pay). The calculator shows both so you can understand where you sit.

PAYE tax bands (2026)

The table below is a quick reference for the monthly PAYE bands used to compute PAYE for employees in this calculator. The page currently models PAYE on a monthly payroll basis.

Monthly Taxable Pay Band (KES)	Rate	How it works
First 24,000	10%	The first portion of taxable pay is taxed at 10%.
Next 8,333 (24,001 - 32,333)	25%	The next portion is taxed at 25%.
Next 467,667 (32,334 - 500,000)	30%	The middle band is taxed at 30%.
Next 300,000 (500,001 - 800,000)	32.5%	Higher-income portion is taxed at 32.5%.
Above 800,000	35%	Any taxable pay above 800,000 per month is taxed at 35%.

Allowable deductions vs reliefs (the big difference)

People often mix up "deductions" and "reliefs", but they affect PAYE in two completely different ways:

Allowable deductions reduce your taxable pay before tax bands are applied. In other words: they reduce the amount of income that is subjected to PAYE.

Reliefs reduce your tax payable after tax has been calculated. In other words: you calculate tax using bands first, then subtract reliefs from the result.

Common allowable deductions for PAYE calculations

Allowable deductions exist to ensure PAYE is applied on income after certain legally recognized costs or contributions. Common items include:

• Retirement contributions (pension/provident/individual retirement fund): contributions to eligible registered retirement arrangements are deductible up to the legal limit. This encourages long-term retirement saving.
• Mortgage interest (residential): interest on a qualifying loan used to purchase or improve premises you occupy for residential purposes, up to the allowed monthly/annual cap.
• SHIF contributions: contributions made to the Social Health Insurance Fund may be treated as allowable deductions in PAYE computation.
• Affordable Housing Levy deductions: amounts deducted as Housing Levy may be treated as allowable deductions in computing taxable employment income.
• Post-retirement medical fund contributions: contributions to an approved post-retirement medical fund can be allowable up to the stated limit.

Because employers and payroll systems differ, the calculator includes toggles for SHIF and Housing Levy as allowable deductions so you can mirror how your payroll is treating them when reconciling your payslip.

Common tax reliefs used in PAYE

Reliefs reduce the tax you pay, not your taxable pay. The most common are:

• Personal relief: a standard tax credit available to resident individuals. It is typically applied automatically in payroll. If your computed tax is less than the relief, PAYE is reduced to zero (it does not become negative).
• Insurance relief: calculated as a percentage of eligible insurance premiums (life/health/education policies under the applicable conditions), up to the legal cap. This reduces PAYE after bands are applied.

Reliefs are one of the biggest reasons why two employees with similar taxable pay can still have different PAYE. For example, someone paying eligible insurance premiums can reduce their PAYE compared to someone who does not.

When is PAYE due?

Employers are required to remit PAYE deducted from employees and file the PAYE return by the 9th day of the following month. This is an employer compliance deadline, but it matters to employees too. If an employer deducts PAYE but fails to remit, it can create compliance and reconciliation issues.

Penalties (why payroll compliance matters)

Late filing, late payment, or failure to deduct/account for PAYE can lead to penalties and interest. In practical terms: PAYE is not optional once it applies, and the monthly deadlines should be treated as strict.

Example calculation (how PAYE is built up)

Below is a simplified example to show the flow. (Your actual payroll may differ depending on benefits, deductions, and reliefs.)

1. Start with gross pay: Basic salary + taxable allowances + taxable non-cash benefits.
2. Subtract allowable deductions: e.g., pension contributions, mortgage interest (within limits), and other allowable items.
3. Apply tax bands: compute tax in each band and add them up to get gross tax.
4. Subtract reliefs: personal relief and insurance relief (if applicable) to get PAYE payable.

About this calculator

This PAYE calculator is designed for clear, practical estimation. It shows the band logic, separates deductions from reliefs, and helps you compare results against your payslip. PAYE can become more complex when you add multiple employers, irregular bonuses, taxable benefits-in-kind, or special cases. If you are unsure about the tax status of a benefit or the eligibility of a deduction/relief, confirm using the latest KRA guidance or consult a qualified tax professional.

Last reviewed: 12 March 2026. Confirm employer-specific payroll treatment, KRA guidance, and month-sensitive SHIF or Housing Levy deductibility before relying on the result for a final filing or payroll decision.