Kenyans Earning Below KSh 32,800 Could Get Full Salary Under Mbadi’s New Tax Plan
**Treasury Secretary John Mbadi gives the taxman a run for his money , announcing a plan to hike Kenya’s proposed zero Pay As You Earn (PAYE) tax threshold to KSh 32,800 a month – a tax break which could help out thousands of salaried workers if the plans get the green light.
This is a step up from the KSh 30,000 threshold the government was looking at originally back in 2026.
John Mbadi made the announcement on Monday, October 19 during the Mashujaa Day 2026 Economy Thematic Week in Eldoret, explaining why the govt wants to raise the income threshold below which workers wont have to cough up PAYE , it’s because things are finally looking up for the economy .
“Because the economy has picked up some steam and is starting to look a lot rosier than it did before,” Mbadi said ” we think that anyone earning KSh 32,800 or less should be able to keep the lot without handing any of it over to the taxman ” He added “That’s an improvement from the KSh 30,000 we were talking about earlier”
So what does this mean for workers ? Well basically if this proposal comes in , workers earning within the revised threshold would get to keep their entire gross salary without any PAYE deductions. But lets not get ahead of ourselves, this is just a proposal , it still needs to go through parliament before it becomes law.
Mbadi Explains New KSh 32,800 PAYE Tax Proposal
John Mbadi said the government is thinking of raising the income threshold below which workers wouldnt pay PAYE because of signs of improvement in the economy.
“Because the economy has picked up some steam and is starting to look a lot rosier than it did before,” Mbadi said ” we think that anyone earning KSh 32,800 or less should be able to keep the lot without handing any of it over to the taxman ” He added “That’s an improvement from the KSh 30,000 we were talking about earlier”
So what does this mean for workers ? Well basically if this proposal comes in , workers earning within the revised threshold would get to keep their entire gross salary without any PAYE deductions. But lets not get ahead of ourselves – this is just a proposal , it still needs to go through parliament before it becomes law.
What Has Changed in Kenya’s Zero PAYE Tax Proposal?
The govet had been thinking of exempting the first KSh 30,000 of monthly employment income from PAYE with income in the subsequent KSh 20,000 band subject to a proposed rate of 25%.
But they had to put the brakes on those plans because they wanted to do some more consultation. So that plan to introduce the new tax laws through legislation in 2026 was put on hold. Now the govet have decided to go with a standalone Tax Laws Amendment Bill.
Mbadi’s announcement now puts the revised zero-PAYE threshold at KSh 32,800 and we are looking at an intended timeline of November 2026 for presenting the bill to parliament.
But its still unclear at this stage what the tax bands will be above KSh 32,800, we will just have to wait and see what happens
Who Will Benefit From the Proposed KSh 32,800 PAYE Threshold?
The proposed changes are going to mainly help Kenyans who get a monthly salary and earn enough to fall under the new exemption limit.
People in jobs like retail, security and domestic work may benefit too if their paychecks fall into the right bracket.
Just how much you save will depend on how much PAYE you’re paying now and how the government ends up structuring the tax bands.
To put it simple, if the proposal goes through as planned, a worker earning Ksh 30,000 a month will be zero PAYE. And so will someone earning exactly Ksh 32,800 a month.
The government is saying this is all part of their effort to make living a bit cheaper and make room for more household spending.
But – zero PAYE doesn’t necessarily mean you won’t have any deductions taken out at all, other kinds of statutory deductions could still be making an impact on your take home pay.
When Will the New Zero PAYE Threshold Take Effect?
The government says they’ll be putting in a Tax Laws Amendment Bill in Parliament in November 2026.
This is just the first step – the changes will still need to go through the whole legislative process before they become law. And when they do – well that depends on the final bill and how it’s structured.
Some people think January 2027 might be the go but to be honest, the government hasn’t confirmed that.
For now – until all this is law and actually in effect, just assume nothing has changed. The existing PAYE rules are still what counts.
What Happens to Kenyans Earning Above KSh 32,800?
Still not entirely clear what’s going to happen to the rest of us. Under the original idea, the income band above Ksh 30,000 was going to be taxed at 25%.
But the fellow in charge – Mbadi – didn’t say whether that rate is going to change now that the exemption has been raised.
It’s all going to get sorted out in the final legislation – but until then, if you earn over Ksh 32,800 a month – just wait and see what the bill says before trying to figure out your tax savings.
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Kenyans Earning Below KSh 32,800 Could Get Full Salary Under Mbadi’s New Tax Plan
