National Treasury Cabinet Secretary John Mbadi has set out the next steps in the government’s efforts to ease the Pay As You Earn (PAYE) tax burden on low-income workers. He said the Treasury will hold nationwide public participation before any proposed changes are brought to Parliament.
Speaking on Wednesday, July 22, during the FY2027/28 Medium-Term Budget Preparation Process at the Kenyatta International Convention Centre (KICC), Mbadi said the government will spend the month of August gathering views from Kenyans on proposals intended to reduce PAYE deductions from workers’ salaries.
He added that the consultations will feed into a report submitted to President William Ruto before legislation is introduced in Parliament.
Mbadi also said the government has not abandoned its earlier plan, despite speculation that it had been shelved.
“I know there has been a lot of concern about payslips. Next month, I will embark on a nationwide public engagement on how to reduce the tax burden on workers’ payslips,” he said.
“Some of you thought we had shelved that idea, but we have not. Throughout the month of August, we will conduct public participation because we have developed a proposal, and other stakeholders have also submitted their own proposals,” he said.
Mbadi said one of the Treasury’s proposals seeks to exempt the first KSh30,000 earned each month from PAYE.
He added that the government is also considering lowering the tax rate on the next KSh20,000 of income, covering workers who earn between KSh30,001 and KSh50,000. Under the suggested approach, the portion would attract a lower rate than it does under the current system.
Mbadi said other stakeholders have submitted alternative options, including reducing PAYE by five percent across all income bands.
He noted that the Treasury will subject every proposal received from different groups to rigorous public participation before making a final decision.
“Our proposal is to make the first KSh30,000 tax-free and reduce the tax burden on the next KSh20,000. Other stakeholders have proposed a five per cent tax reduction across the board. We want to consolidate all these proposals and present them to Kenyans for their views,” he said.
The Treasury will gather input from workers, employers, professional bodies, and other stakeholders before it settles on a final proposal.
Mbadi said the consultations will run through August.
“By the end of August, I will have travelled across the country to collect public feedback. We have agreed with the President that once I submit the report, we will introduce the necessary legislation in September so that Kenyans can begin to enjoy some relief on their payslips,” he said.
The proposal follows the Treasury’s decision to omit the promised PAYE relief for salaried workers in the Finance Bill 2026. Employees, meanwhile, have continued to deal with rising statutory deductions and growing pressure on household incomes.
Speaking to stakeholders, Parliament’s Finance and National Planning Committee Chairperson Kuria Kimani said Treasury simulations indicated that raising the minimum taxable income threshold from KSh24,000 to KSh30,000 would create a KSh35 billion revenue shortfall.
Kimani said the measures form part of wider tax reforms meant to increase workers’ disposable income while preserving the revenue the government needs to fund public programmes.
