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Treasury Cabinet Secretary John Mbadi has suggested exempting Kenyans earning Sh30,000 or less from Pay As You Earn (PAYE) tax.
The proposal, which still requires parliamentary approval, is intended to ease the cost-of-living pressure on low-income earners.
Speaking at the People’s Dialogue Forum in Meru, Mbadi said the government does not plan to introduce new taxes. Instead, it is focusing on lowering existing taxes while reducing dependence on heavy borrowing.
He noted that the idea was reached after consultations with President William Ruto, who instructed him to urgently present the proposal to Parliament.
Mbadi announced that the government had agreed that low-income earners should be given tax relief. Under the plan, all salaried workers earning Sh30,000 and below would pay no PAYE.
According to Mbadi, Kenya has about 3,065,165 salaried employees, with roughly 1.5 million earning Sh30,000 or less. He emphasized that these workers should pay zero PAYE, saying the government should focus on higher earners instead.
He added that he would not wait for the Finance Bill in June, but would instead table a Tax Laws (Amendment) Bill in Parliament as soon as it resumes.
In addition, the Treasury plans to reduce the tax rate for those earning between Sh30,000 and Sh50,000. Mbadi said the current 30 per cent rate, which applies from about Sh33,000, would be lowered to 25 per cent.
Under the proposed structure, someone earning Sh50,000 would not be taxed on the first Sh30,000, while the remaining Sh20,000 would be taxed at 25 per cent.
Mbadi explained that the goal is to increase disposable income, noting that many Kenyans are struggling financially and consumer demand is declining.
He said the changes would benefit an additional 244,000 workers, increasing the total number of Kenyans receiving tax relief to about 1.7 million.
At the same time, Mbadi said the government would step up efforts to bring informal and non-salaried earners into the tax system to promote fairness.
He stressed that individuals earning substantial income outside formal employment should also pay taxes, adding that the Kenya Revenue Authority would rely on technology and systems—not force—to expand tax compliance.
