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Amend the Income Tax PAYE Bands
The Kenya Bankers Association (KBA) has proposed a formal amendment to the Finance Bill, 2026 to reform Pay As You Earn (PAYE) taxation. The amendment proposes:
- Exempting the first KSh 30,000 earned monthly from PAYE taxation; and
- Reducing all PAYE tax bands by five percentage points.
Proposed new tax bands (monthly):
| Monthly Taxable Income | Rate of Tax |
|---|---|
| On the first KSh 30,000 | Nil |
| On the next KSh 24,000 | 5% |
| On the next KSh 8,333 | 20% |
| On the next KSh 467,667 | 25% |
| On the next KSh 300,000 | 27.5% |
| On all income exceeding KSh 830,000 per month | 30% |
Justification: This amendment seeks to cushion Kenyan workers against the rising cost of living, declining purchasing power, and increased household economic strain by increasing disposable income through PAYE reforms. It aligns with the constitutional principles of equity, social justice, economic inclusion, and fair taxation under Articles 10, 43, and 201 of the Constitution of Kenya.
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