How the calculation works
Kenya's PAYE follows a fixed sequence laid out by KRA. Each step builds on the previous one, and the order matters because some deductions reduce taxable income (lowering PAYE) while others are applied as tax credits afterwards.
Step 1: Statutory deductions from gross
Three statutory deductions come straight off your gross salary every month:
- NSSF: 6% of pensionable pay up to KES 108,000, the Year 4 upper limit from 1 February 2026. Tier I is the first KES 9,000 (max KES 540) and Tier II is the rest up to KES 108,000 (max KES 5,940). Combined employee maximum is KES 6,480.
- SHIF: 2.75% of gross, no upper cap, minimum KES 300.
- Affordable Housing Levy: 1.5% of gross, no cap.
Step 2: Allowable deductions for tax
Some contributions reduce your taxable income before PAYE is computed, even though they may also be cash outflows:
- Pension contributions, capped at KES 30,000 per month
- Mortgage interest (interest only, not principal), capped at KES 30,000 per month
- Post-retirement medical fund contributions, capped at KES 15,000 per month
Step 3: Compute PAYE on taxable income
Taxable income is your gross minus statutory deductions minus allowable deductions. PAYE applies progressively:
- 10% on the first KES 24,000
- 25% on the next KES 8,333 (24,001 to 32,333)
- 30% on the next KES 467,667 (32,334 to 500,000)
- 32.5% on the next KES 300,000 (500,001 to 800,000)
- 35% on anything above KES 800,000
Step 4: Apply tax reliefs
Two reliefs reduce the PAYE you owe:
- Personal relief: KES 2,400 per month, available to every PAYE-paying resident. Equivalent to KES 28,800 per year.
- Insurance relief: 15% of life, education, or health insurance premium, capped at KES 5,000 per month tax credit.
Step 5: Net pay
Net pay equals gross minus NSSF minus SHIF minus Housing Levy minus pension contribution minus PAYE payable. Mortgage interest and post-retirement medical contributions reduce PAYE but are paid separately, so they do not reduce your net pay directly.
Worked example: KES 100,000 gross
Here is the full sum for a KES 100,000 monthly salary with no pension, insurance or mortgage extras. The figures come from the same code that runs the calculator above.
| Step | How it is worked out | KES |
|---|---|---|
| Gross pay | Monthly salary before deductions | 100,000 |
| NSSF Tier I | 6% of the first KES 9,000 | 540 |
| NSSF Tier II | 6% of pay from KES 9,000 to KES 100,000 | 5,460 |
| SHIF | 2.75% of gross | 2,750 |
| Affordable Housing Levy | 1.5% of gross | 1,500 |
| Taxable pay | Gross less NSSF, SHIF and the Housing Levy | 89,750 |
| Tax band | First KES 24,000 at 10% | 2,400.00 |
| Tax band | Next KES 8,333 at 25% | 2,083.25 |
| Tax band | Next KES 57,417 at 30% | 17,225.10 |
| Tax before relief | Sum of the bands (21,708.35), rounded to the shilling | 21,708 |
| Personal relief | Fixed monthly tax credit | 2,400 |
| PAYE | Tax before relief less personal relief | 19,308 |
| Net pay | Gross less NSSF, SHIF, Housing Levy and PAYE | 70,442 |
Take-home is KES 70,442, about 70.4% of gross. The order matters: NSSF, SHIF and the Housing Levy come off first, PAYE is worked out on what is left, and the personal relief is taken off the tax, not off your pay.
A voluntary pension contribution of up to KES 30,000 a month also comes off taxable pay, but it comes out of your cash pay as well.
Finance Act 2026: what changed for employees
KRA's Finance Act 2026 explainer lists no change to the PAYE bands or the KES 2,400 monthly personal relief, so the calculator above works the same way as before. Most of the Act took effect on 1 July 2026. The points that touch salaried workers:
- Earlier filing deadline. From 1 January 2027, individuals, self-employed people and partnerships file their income tax return by 30 April, the last day of the fourth month after the year ends.
- Gratuity. Gratuity is tax-exempt only where the contract of service runs for at least three continuous years (or extends a three-year contract) and the gratuity does not exceed 31% of the emoluments earned in that period.
- Pre-filled returns. KRA may send you a return already filled in from the information it holds. You can confirm or amend it, so check every pre-filled line before you submit.
- Tax amnesty. Penalties, interest and fines on tax due up to 31 December 2025 are covered if the principal tax is paid by 31 December 2026. The amnesty does not remove the principal tax itself.
Sources
- KRA, Finance Act 2026: What It Means for You, read 25 October 2026.
- KRA, Public notice on PAYE after the Tax Laws (Amendment) Act 2024, 19 December 2024: SHIF and the Housing Levy are deducted before PAYE.
- PwC Kenya, Year 4 NSSF Rates, effective February 2026, January 2026.
Reading your payslip alongside this calculator
A standard Kenyan payslip lists, top to bottom: gross pay, then statutory deductions (NSSF, SHIF, Housing Levy), then PAYE, then any employer-arranged deductions (SACCO contributions, loan repayments, welfare), then net pay. If your payslip differs from this calculator, the gap is almost always the employer-arranged deductions, since those are specific to each company. Match the statutory lines first to verify the calculation, then the difference is the employer line items.
What this calculator does not handle
- Non-cash benefits like company cars, housing allowances treated as benefits, and stock options. These follow separate KRA rules.
- Backdated salary changes or leave-pay accruals.
- Withholding tax on consultancy income (treated separately from PAYE).
- Persons with disability tax exemption (PWD certificate from KRA exempts the first KES 150,000 per month, file separately).
For complex situations consult a registered tax agent. The calculator assumes a standard PAYE employee on cash salary.