By the 254.ke Newsroom
Kenyans earning up to Sh32,333 a month would pay no PAYE under a proposal Treasury Cabinet Secretary John Mbadi outlined this week, up from the current effective tax-free level of Sh24,000. Mbadi says affected workers would take home about Sh2,083 more each month. The change is not law yet: a bill is still being drafted, and the date it reaches Parliament is unclear as of October 26, 2026.
What is the new PAYE threshold?
President William Ruto pledged on Mashujaa Day, October 20, to exempt earners up to Sh32,333 a month and told Treasury to take the proposals to Parliament, according to Citizen Digital. The figure is higher than the Sh30,000 Ruto and Mbadi first announced in February. Mbadi said the increase followed proposals from stakeholders, including the Kenya Bankers’ Association.
Some outlets have printed slightly different numbers, among them Sh32,353 and Sh32,800. The Sh32,333 figure is the one used in the Star’s October 25 report on Mbadi’s briefing and in Citizen Digital’s account of the president’s pledge, and it is the figure used here.
How much would workers gain?
The Star reports Mbadi saying a worker earning at the threshold would gain about Sh2,083 a month. That matches the arithmetic of the current bands published by the Kenya Revenue Authority (KRA).
- The first Sh24,000 of monthly pay is taxed at 10%, or Sh2,400.
- The next Sh8,333 is taxed at 25%, or about Sh2,083.
- Personal relief of Sh2,400 a month is then deducted.
- Net PAYE on Sh32,333 today: roughly Sh2,083. Under the proposal: nil.
Put simply, the plan would wipe out tax on the first two bands once personal relief is applied. Workers earning above the threshold would continue to be taxed under the applicable bands. The Star’s report did not detail how the bands above the threshold would change.
How many workers would be affected?
According to the Star’s account of Mbadi’s figures, the number of exempt salaried workers would rise from about 1.329 million to roughly 1.692 million, an addition of 362,846. About 1.778 million formally employed Kenyans would keep paying PAYE, out of 3.468 million formal workers.
Citizen Digital notes it remains unclear how the government will arrive at about 1.7 million untaxed formal employees, an increase of roughly 300,000.
When will the change take effect?
Reports differ on the timeline. The Star quotes Mbadi saying the bill could be ready “by next week as guided by the President” and that he is “very optimistic” it will pass before Parliament goes on recess, with effect from January. Citizen Digital, citing Mbadi, reports that drafting could be finished by the end of November 2026, after which the bill goes through the usual parliamentary process.
Until a law is passed, employers must keep applying the existing PAYE rules, the Kenya Times reported on October 22. Payslips will not change on the strength of an announcement.
Why is this a repeat promise?
| Date | What happened |
|---|---|
| Feb 2, 2026 | Ruto and Mbadi promise no income tax for those earning under Sh30,000, with the change expected before mid-year |
| May 28, 2026 | Ruto says Treasury warned the cut would cost Sh40 billion and approves it anyway |
| Jun 11, 2026 | Mbadi says the promise is “not off the table,” though it was not in the Finance Bill |
| Oct 20, 2026 | Ruto raises the threshold to Sh32,333 and directs Treasury to submit proposals to Parliament |
The Sh40 billion figure was Ruto’s estimate for the earlier Sh30,000 threshold. None of the reports reviewed gives a revenue cost for the Sh32,333 limit. Mbadi’s rationale, as reported, is that the economy has shown signs of recovery, so “part of it should go back to Kenyans.”
FAQ
Is the Sh32,333 PAYE exemption in force?
No. It is a proposal. A bill must be drafted, cleared by the Attorney-General and passed by Parliament before it applies.
Who would benefit?
Salaried workers earning up to Sh32,333 a month, an estimated 362,846 additional people becoming exempt, according to figures attributed to Mbadi.
Will higher earners get any relief?
The reports reviewed do not say. They state only that those above the threshold continue under the applicable bands.
Where can I check the current PAYE bands?
The KRA publishes them on its PAYE page.
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