Reprieve For Workers As Ruto Proposes Scraping PAYE For Kenyans Earning Under KSh 30,000

In a major policy shift aimed at easing the economic squeeze on working-class households, President William Ruto has announced a sweeping plan to entirely exempt low-income earners from Pay As You Earn (PAYE) tax deductions.

Speaking during the National Prayer Breakfast on Thursday, May 28, 2026, the Head of State revealed that he has directed the National Treasury to raise the tax-free income threshold to KSh 30,000, up from the current KSh 24,000 baseline.

Boosting Take-Home Pay for Low-Income Earners

Currently, Kenyan workers earning between KSh 24,000 and KSh 30,000 are hit with a 10 percent PAYE deduction. If Parliament approves the executive proposal, this entire bracket will be completely insulated from income tax, instantly increasing their monthly disposable income.

“I told the Treasury that it is time to look at how we can slow down, especially for the low-income earners, and remove some taxes from them,” President Ruto disclosed. “That is why we will be putting a proposal before parliament to say that all the low-income earners, the people who earn up to KSh 24,000 [and up to KSh 30,000], have been paying PAYE at 10 per cent, and we are saying they will not pay anymore.”

The President acknowledged that this aggressive tax relief will trigger a KSh 40 billion revenue deficit for the exchequer. However, he maintained that the government is engineered to plug this gap through innovative, non-burdensome economic reforms that spur production rather than over-taxing the vulnerable.

Banking Sector’s Push for Pay Slip Relief

The President’s directive comes on the heels of intense lobbying from corporate stakeholders who have warned that heavily depleted pay slips are suppressing consumer spending. On May 21, 2026, the Kenya Bankers Association (KBA) appeared before the National Assembly Finance Committee to present submissions on the Finance Bill, 2026, aggressively demanding a wider review of PAYE bands.

KBA argued that a broader 5 percent PAYE reduction across all tax brackets would inject liquidity back into the economy, ultimately expanding Kenya’s GDP by KSh 42 billion.

“The assurance is that the KSh 28 billion will be offset within the first year,” stated KBA CEO Raimond Molenje during the committee hearings. “What this will result in is the fact that in the second and the third year we will be able to generate much higher taxes, more than the KSh 31 billion that will be generated in the first year.”

By aligning the executive’s tax proposals with growing corporate and public outcry, the administration hopes to strike a delicate balance between generating revenue for the 2026/2027 fiscal year and providing essential economic insulation for Kenya’s workforce.