KBA’s PAYE Proposal: Current Tax Bands and What Changed in 2026
Updated October 9, 2026
The Kenya Bankers Association (KBA) proposed changing Kenya’s PAYE bands in its submission for the 2026/27 budget. The proposal would raise the monthly tax-free threshold to KSh30,000 and cap the top rate at 30%. It was an industry recommendation, not a tax change. KRA’s published PAYE guidance continues to show the existing bands, so employees and employers should use the current official schedule unless a later law or KRA notice changes it.
What the bankers proposed
KBA proposed no PAYE on monthly income below KSh30,000, then marginal rates of 15% from KSh30,001 to KSh50,000, 20% from KSh50,001 to KSh100,000, 25% from KSh100,001 to KSh400,000 and 30% above KSh400,000. The association argued that lower deductions could leave workers with more take-home pay and support household spending.
What KRA’s published bands show
KRA’s published monthly PAYE schedule lists five marginal rates: 10% on the first KSh24,000; 25% on the next KSh8,333; 30% on the next KSh467,667; 32.5% on the next KSh300,000; and 35% on income above KSh800,000. Personal relief and other tax rules also affect an employee’s final tax calculation.
Proposal versus law
KBA submitted its recommendations for consideration during the Finance Bill 2026 process. The proposal was not adopted as the new PAYE schedule in the Finance Act 2026. A policy statement or stakeholder submission does not change payroll tax by itself; a change must be enacted and reflected in official tax guidance.
This is general tax information, not an individual payroll calculation. Check the latest KRA guidance or consult a qualified tax professional about deductions and personal circumstances.
