Ruto Cuts PAYE Rate to 25% for Workers Earning Up to Ksh50,000

President William Ruto has announced a tax relief plan for low and middle-income earners, proposing reductions to personal income tax rates that would significantly benefit workers earning up to Ksh50,000 a month.

In a statement made at State House, Nairobi, during a meeting with United Democratic Alliance aspirants, the President revealed that employees earning Ksh50,000 or less would see their tax rate reduced from 30% to 25%. Additionally, those earning below Ksh30,000 would be exempt from income tax altogether. Ruto attributed the proposals to his administration’s fiscal management since taking office in 2022.

“Any Kenyan earning up to Ksh50,000 will have their taxes reduced from 30% to 25%. 1.5 million working Kenyans will no longer pay taxes,” Ruto said. 

The proposals will now be forwarded to Parliament for further review and approval.

Under the current system, an individual earning Ksh50,000 is taxed at the highest rate, but their payslip also includes several mandatory deductions. 

These include contributions to the National Social Security Fund, the Social Health Insurance levy, and the Housing Levy, which together amount to roughly Ksh5,125 before PAYE is applied. After accounting for personal relief, such a worker currently pays around Ksh5,800 in PAYE, leaving a net salary of approximately Ksh38,600. 

The proposed reduction in the top PAYE rate to 25% would provide some relief, though the final impact will depend on how Parliament decides to adjust tax bands and allowances. The President framed the initiative as part of a wider effort to ease the financial burden on ordinary Kenyans, aiming to make the tax system fairer.

However, the proposal does not address concerns over other statutory deductions, particularly the Housing Levy, which has been criticised for further eroding workers’ disposable incomes.