The National Assembly has released the Finance Bill 2026, proposing amendments touching on the Pay As You Earn (PAYE) ahead of the June 18 highly anticipated vote.

🇰🇪 Breaking It Down

From the amendment documents seen by  Kenyans.co.ke on June 18, Kathiani MP Robert Mbui, a huge antagonist of the Finance Bill 2026 tabled changes to the PAYE framework, targeting Clause 22 of the Bill currently before the National Assembly for debate.

Under the proposed structure, income up to Ksh360,000 annually will attract a tax rate of 10 per cent, offering some relief to lower-income earners at the bottom of the bracket.

Additionally, the next Ksh100,000 above that threshold will be taxed at 17.5 per cent, a new band that did not exist in the previous structure, hence introducing a more protracted approach to taxation.

📌 What You Need to Know

On the other hand, earnings between Ksh460,000 and Ksh6,072,000 annually fall under the 25 per cent band, which captures the bulk of middle-income salaried workers in the country.

The amendments also propose a 27.5 per cent rate to the next Ksh3,600,000 of income, targeting higher earners and creating a clearer separation between the middle and upper income categories.

Any income exceeding Ksh9,600,000 annually will be taxed at the top rate of 30 percent, applying to the highest earners in both the public and private sectors.

These changes are likely to affect over 3.1 million Kenyan workers in the aforementioned tax pool that contributes their PAYE to the Kenya Revenue Authority (KRA).

The amendments to the PAYE bands are scheduled to take effect on January 1, 2027, if passed, giving employers and employees time to adjust payroll systems accordingly.

Beyond PAYE, the Bill also proposes changes to how royalties are defined, specifically expanding the definition to include digital payment card networks and platforms, covering fees charged for access or participation in such systems.

📰 Source: Kenyans.co.ke