Millions of salaried Kenyans will have to wait longer for proposed income tax relief after National Treasury Cabinet Secretary John Mbadi confirmed that the review of Pay As You Earn (PAYE) tax bands has been pushed to October 2026.
Mbadi said public participation on the proposed changes will begin in the first week of October, delaying a process he had previously indicated would see a Bill tabled in Parliament by the end of September.
He attributed the latest delay to a congested legislative calendar and the constitutional requirement for public participation before the government can proceed with the tax changes.
Why the PAYE review has been delayed
Mbadi said the government must first engage the public to avoid legal challenges that could derail the proposed reforms.
“It is coming. I will do the public participation first. Kenya has become what it is because of the Constitution that we have. If I bring them without public participation, someone might go to court to stop it,” he said.
The CS also noted that his participation in the IMF and World Bank Annual Meetings from October 12 to 18 could interrupt the process.
“I will break it when I am going for the spring meeting, then come back and conclude it, then we process the Bill through the National Assembly,” Mbadi said.
The proposed changes would then have to go through Parliament, including another round of public participation as part of the legislative process.
What tax relief has been proposed
Previous government discussions have centred on raising the tax-free threshold so that workers earning up to KSh30,000 a month would not pay PAYE.
Under the proposals, employees earning between KSh30,000 and KSh50,000 would also see their tax rate reduced from 30% to 25%.
If implemented, the changes would affect more than 3.4 million salaried workers across the country.
The proposals were not included in the Finance Bill 2026, prompting criticism from labour groups and employees who had expected the government to deliver the promised relief.
President William Ruto subsequently directed the Treasury to develop measures aimed at reducing PAYE deductions and increasing workers’ take-home pay.
Treasury faces revenue pressure
The proposed tax changes also come as the government seeks to balance tax relief with its revenue needs.
Treasury projections indicate that raising the tax-free threshold alone could cost the government about KSh35 billion annually in foregone revenue.
This has added pressure to the process as officials consider how to provide relief to workers while protecting government revenues.
Once public participation is completed, the proposals are expected to be incorporated into a Tax Laws Amendment Bill before being taken through the parliamentary process.
When could workers see the changes?
The delayed consultation process means salaried workers are unlikely to see an immediate change in their monthly PAYE deductions.
With public participation expected to begin in October, followed by the drafting and passage of the amendment Bill, any changes to tax bands could take effect in 2027, depending on the pace of the legislative process.
For millions of employees, the immediate outcome is therefore another wait for the promised reduction in income tax deductions.
