MERU County—Feb 02, 2026—Treasury Cabinet Secretary John Mbadi has announced that Kenyans earning below Sh30,000 per month will be exempted from Pay As You Earn (PAYE) tax under proposed reforms aimed at easing the cost of living for low-income earners.
Mbadi said the government plans to raise the tax-free income threshold, arguing that workers at the lower end of the income scale are disproportionately burdened by statutory deductions amid rising prices and economic pressures.
“Anyone earning Sh30,000 and below should not be paying PAYE. You pay zero,” Mbadi said, adding that the proposal has the backing of President William Ruto and will be forwarded to Parliament for approval.
Under the current tax regime, salaried workers begin paying PAYE at lower income levels, reducing disposable income for millions of Kenyans. The proposed changes would lift PAYE obligations for a significant number of low-wage earners, leaving them with more take-home pay.
In addition to the exemption for those earning below Sh30,000, the Treasury is proposing a reduction in the PAYE rate for middle-income earners, with Mbadi saying those earning between Sh30,000 and Sh50,000 would benefit from a lower tax rate.
The Cabinet Secretary said in Meru County on Monday that the measures are intended to put more money in the hands of workers to meet basic needs such as food, housing, transport and education, while also stimulating consumption and economic activity.
The proposals are expected to be included in upcoming tax amendment legislation to be tabled in Parliament as part of the government’s broader fiscal reforms.
However, their implementation will depend on parliamentary approval and alignment with the government’s revenue and budget targets.
The announcement comes amid sustained public concern over the cumulative impact of PAYE and other statutory deductions on household incomes.
