Kenya payroll compliance in 2026 requires employers to correctly calculate and remit five separate statutory obligations – PAYE, NSSF, SHIF, the Affordable Housing Levy, and NITA – each with its own rate, its own calculation base, and its own KRA or government portal. Get any one of them wrong and the Kenya Revenue Authority applies automatic interest and penalties from the first day of the delay. This guide gives you the verified 2026 rates, a worked salary calculation, all filing deadlines, and a monthly compliance checklist for employers operating in Kenya.
| 📌 Official sources: Kenya Revenue Authority (kra.go.ke) | NSSF Kenya (nssf.or.ke) | Social Health Authority – SHIF (sha.go.ke). Rates in this guide reflect February 2026 NSSF Year 4 update and June 2026 KRA confirmed bands. |
PAYE Kenya 2026: Tax Bands, Personal Relief, and Employer Obligations
Pay As You Earn (PAYE) is the primary method through which the Kenya Revenue Authority collects income tax from employed individuals. Every employer in Kenya must deduct PAYE monthly and remit it to KRA by the 9th of the following month via the KRA iTax portal.
Kenya uses a progressive five-band system. The tax is applied to taxable income, which is gross salary minus NSSF contributions and the Affordable Housing Levy employee share:
| Monthly taxable income (KES) | Rate | Tax on band | Cumulative tax |
|---|---|---|---|
| First KES 24,000 | 10% | KES 2,400 | KES 2,400 |
| KES 24,001 to KES 32,333 | 25% | Up to KES 2,083 | KES 4,483 |
| KES 32,334 to KES 500,000 | 30% | Up to KES 140,000 | KES 144,483 |
| KES 500,001 to KES 800,000 | 32.5% | Up to KES 97,500 | KES 241,983 |
| Above KES 800,000 | 35% | On the excess | KES 241,983 + 35% of excess |
- Personal relief: KES 2,400 per month is deducted from the calculated PAYE liability. This is a direct reduction in tax payable, not a deduction from taxable income. For an employee whose PAYE calculates to exactly KES 2,400, the net PAYE liability is zero.
- Filing deadline: for paye kenya employer, the submission and payment deadline is the 9th of the following month via KRA iTax. A penalty of 25% of the unpaid tax (minimum KES 10,000) plus 1% per month interest applies from the due date.
- Taxable income calculation: gross salary minus NSSF employee contribution minus Affordable Housing Levy employee share = taxable income. SHIF (2.75%) is not deducted before PAYE; it is calculated separately on gross salary.
- Non-residents: a flat 30% rate applies to non-resident employees’ Kenya-sourced income; personal relief is not available to non-residents.
NSSF Kenya Rates 2026: Tier I, Tier II, and the February 2026 Update
The National Social Security Fund (NSSF) provides retirement, disability, and survivors benefits. From February 2026 (Year 4 of the NSSF Act 2013 phased implementation), the contribution tiers increased again:
| Tier | Earnings range | Rate per side | Maximum per side / month |
|---|---|---|---|
| Tier I (mandatory, cannot redirect) | First KES 9,000 of pensionable pay | 6% employee + 6% employer | KES 540 employee / KES 540 employer |
| Tier II (can redirect to approved pension) | KES 9,001 to KES 108,000 | 6% employee + 6% employer | KES 5,940 employee / KES 5,940 employer |
| Combined maximum (both tiers) | Up to KES 108,000 | – | KES 6,480 employee / KES 6,480 employer = KES 12,960 total |
- Employer obligation: deduct the employee’s share, match it as employer, and remit to NSSF by the 15th of the following month.
- Tier II portability: unlike Tier I (which must go to NSSF), Tier II contributions can be redirected to approved occupational pension schemes.
- PAYE interaction: the employee’s total nssf kenya rates contribution reduces taxable income for PAYE purposes – an employee earning KES 80,000 with KES 4,800 NSSF sees their PAYE base reduced accordingly.
| ⚠ Legal note – NSSF court proceedings: Kenya’s courts and NSSF are sending conflicting signals on the enhanced rates, and the position is moving fast. The Employment and Labour Relations Court declared the NSSF Act 2013 unconstitutional in September 2022. A Court of Appeal ruling on 29 May 2026 declined to pause enforcement of that judgment – but on 26 June 2026 the Court of Appeal set that same ruling aside in full, admitting it had mistakenly decided the wrong application. A fresh ruling was scheduled for 3 July 2026. Throughout, NSSF has continued instructing employers to pay the enhanced Tier I/Tier II rates, a position backed by COTU. Employers should monitor updates from the NSSF portal (nssf.or.ke) and obtain legal confirmation of the current obligation for their specific circumstances, given how quickly this has changed. |
SHIF: What Replaced NHIF and How to Calculate the 2026 Contribution
| 📌 NHIF is now SHIF: nhif contributions kenya 2026 no longer apply under the old NHIF system. The National Hospital Insurance Fund (NHIF) was replaced by SHIF, the Social Health Insurance Fund, administered by the Social Health Authority (SHA), effective October 2024. All remittances that previously went to NHIF now go to SHA under the SHIF framework. |
SHIF provides healthcare coverage for contributors and their registered dependants at public and accredited private healthcare facilities. Key features:
- Rate: 2.75% of gross monthly salary. This is an employee-only deduction – the employer has no matching contribution for SHIF (unlike NSSF and the Housing Levy).
- No ceiling: unlike the old NHIF which was banded (maximum KES 1,700/month), SHIF is fully proportional. A higher-earning employee contributes proportionally more.
- Calculation base: applied to gross salary, not taxable income. SHIF does not reduce the PAYE base.
- Filing deadline: 9th of the following month, remitted via the Social Health Authority portal (sha.go.ke).
- Employer obligations: deduct from employee salary, remit to SHA by the 9th. Verify all employees are registered on the SHA portal; NHIF members should have migrated automatically.
Kenya Housing Levy 2026: The Affordable Housing Levy That Survived Court Challenges
The Affordable Housing Levy (AHL) is a statutory deduction introduced under the Affordable Housing Act 2023, directed to the Affordable Housing Fund for social housing construction. Despite multiple legal challenges through 2023-2024, the KRA confirmed the AHL remains in full force as of June 2026.
| Levy | Employee rate | Employer rate | Calculation base |
|---|---|---|---|
| Affordable Housing Levy (AHL) | 1.5% of gross salary | 1.5% of gross salary (matches employee) | Gross monthly salary – no ceiling |
- Filing: filed alongside PAYE on KRA iTax by the 9th of the following month. The kenya housing levy is part of the same iTax filing cycle as PAYE.
- Employer matching: the employer matches the employee’s 1.5% contribution. For an employee earning KES 80,000, the employee pays KES 1,200 and the employer pays KES 1,200, totalling KES 2,400 combined.
Full Kenya Payroll Calculation: Worked Example at KES 80,000 Gross Monthly Salary
Using a resident Kenyan employee earning KES 80,000 gross per month (February 2026 NSSF rates):
| Deduction | Calculation | Amount (KES) |
|---|---|---|
| NSSF – Tier I (employee) | 6% x KES 9,000 | 540 |
| NSSF – Tier II (employee) | 6% x (KES 80,000 – KES 9,000) = 6% x KES 71,000 | 4,260 |
| NSSF employee total | 4,800 | |
| Housing Levy (employee) | 1.5% x KES 80,000 | 1,200 |
| Taxable income | KES 80,000 – KES 4,800 (NSSF) – KES 1,200 (AHL) = KES 74,000 | 74,000 |
| PAYE – 10% on first KES 24,000 | 2,400 | |
| PAYE – 25% on KES 24,001 to KES 32,333 (KES 8,333) | 2,083 | |
| PAYE – 30% on KES 32,334 to KES 74,000 (KES 41,667) | 12,500 | |
| PAYE before personal relief | 16,983 | |
| Less: personal relief | Fixed KES 2,400/month | (2,400) |
| PAYE payable | 14,583 | |
| SHIF (employee) | 2.75% x KES 80,000 (calculated on gross) | 2,200 |
| TOTAL employee deductions | NSSF + AHL + PAYE + SHIF | 22,783 |
| Employee net take-home | KES 80,000 – KES 22,783 | 57,217 |
| Employer cost (on top of gross salary) | Calculation | Amount (KES) |
|---|---|---|
| Gross salary | 80,000 | |
| NSSF employer match | 6% x KES 9,000 + 6% x KES 71,000 = KES 4,800 | 4,800 |
| Housing Levy employer match | 1.5% x KES 80,000 | 1,200 |
| NITA (if applicable: 5+ employees) | 0.5% x KES 80,000 / 3 (quarterly levy) | 133 (monthly equivalent) |
| Total employer cost per month | approx. KES 86,133 |
NITA and Other Kenya Employer Payroll Obligations
- NITA (National Industrial Training Authority): 0.5% of total gross employee payroll per quarter, paid by the employer only (no employee deduction). Applies to establishments with 5 or more employees. Remitted quarterly to NITA via the NITA portal. Returns are used to fund industrial training programmes and may partially offset levy payments if the employer runs approved training.
- Work permits and passes: all foreign employees must hold a valid work permit under the Kenya Citizenship and Immigration Act. Begin renewal process 60-90 days before expiry.
- P9 forms: at the end of each tax year (December 31), employers must issue P9 forms to all employees. The P9 shows gross pay, taxable income, PAYE deducted for the year, and personal relief claimed. Employees use P9 forms to file individual income tax returns with KRA. Submission to employees is typically required by end of February. Kenya payroll tax compliance depends on accurate P9 data throughout the year.
- iTax annual reconciliation: file the annual PAYE return on KRA iTax by 30 June, reconciling monthly P10 declarations against employee P9 totals for the prior year.
Kenya Payroll Compliance Checklist: Monthly, Quarterly, and Annual Tasks
For multi-country employers running Kenya alongside UAE, Saudi Arabia, South Africa, or India operations, HROPAL’s multi-region payroll module handles all statutory filings in one platform. See the Africa payroll cluster: South Africa SARS compliance guide and the multi-country payroll compliance guide.
Monthly:
- By 9th: file and pay PAYE on KRA iTax. Calculate on taxable income (gross minus NSSF employee contribution and AHL employee share). Deduct personal relief (KES 2,400) from tax calculated.
- By 9th: file and pay SHIF on SHA portal. 2.75% of gross salary deducted from employee; no employer match.
- By 9th: file and pay Kenya Housing Levy alongside PAYE on KRA iTax. 1.5% employee + 1.5% employer = 3% of gross salary.
- By 15th: remit nssf kenya rates to the NSSF portal. Tier I (max KES 540 each) + Tier II (max KES 5,940 each). Monitor legal status of enhanced rates.
Quarterly:
- NITA levy: 0.5% of gross quarterly payroll for establishments with 5+ employees. File and pay via NITA portal within 9 days after each quarter end.
Annual:
- By 28/29 February: issue P9 forms to all employees covering the prior year’s gross income, taxable income, PAYE deducted, and personal relief.
- By 30 June: file the employer annual PAYE return on KRA iTax, reconciling monthly P10 declarations against employee P9 totals for the prior year.
- Throughout year: track work permit expiry for all foreign employees. Begin renewal 60-90 days before expiry.
For context on how Kenya’s payroll obligations compare to other African markets and global compliance requirements, see HROPAL’s guide on HR compliance for global workforces.
Frequently Asked Questions About Kenya Payroll Compliance
Q1. What are the PAYE tax bands in Kenya in 2026?
Kenya’s 2026 PAYE tax bands are: 10% on the first KES 24,000 of monthly taxable income; 25% on KES 24,001 to KES 32,333; 30% on KES 32,334 to KES 500,000; 32.5% on KES 500,001 to KES 800,000; and 35% on income above KES 800,000. A personal relief of KES 2,400 per month is deducted from the calculated tax. PAYE is filed and paid via KRA iTax by the 9th of the following month.
Q2. What replaced NHIF in Kenya? What are the current rates?
NHIF (National Hospital Insurance Fund) was replaced by SHIF, the Social Health Insurance Fund, administered by the Social Health Authority (SHA), effective October 2024. The SHIF contribution rate is 2.75% of gross monthly salary deducted from the employee. Unlike the old NHIF, which had fixed bands capped at KES 1,700/month, SHIF has no ceiling. There is no employer matching contribution for SHIF. Employers remit SHIF to the SHA portal by the 9th of the following month.
Q3. What are the NSSF contribution rates in Kenya in 2026?
From February 2026 (Year 4 of NSSF Act 2013 implementation), NSSF contributions are: Tier I at 6% of the first KES 9,000 (maximum KES 540 per side per month); Tier II at 6% on earnings between KES 9,000 and KES 108,000 (maximum KES 5,940 per side per month). The combined maximum is KES 6,480 per employee and KES 6,480 per employer, totalling KES 12,960 per month. Note: as of late June 2026 the courts had not settled the enhanced rates’ legal status – a May 2026 Court of Appeal ruling on the question was itself vacated weeks later for a procedural error – though NSSF continues instructing employers to pay the enhanced rates. Confirm current status before relying on this.
Q4. What is the Kenya Housing Levy and how is it calculated?
The Affordable Housing Levy (AHL) is 1.5% of gross monthly salary deducted from the employee, with the employer matching 1.5%. Both are calculated on gross salary with no ceiling. The AHL is filed alongside PAYE on KRA iTax by the 9th of the following month. The employee’s 1.5% reduces taxable income for PAYE purposes. The AHL has been in full force since 2023 and survived legal challenges; it remains in force as of June 2026.
Q5. When is Kenya PAYE due and what are the penalties for late payment?
PAYE must be filed and paid via KRA iTax by the 9th of the following month. A penalty of 25% of the unpaid tax (minimum KES 10,000) applies immediately on late payment. Interest at 1% per month on the outstanding balance accrues until the amount is paid. Employers who consistently fail to remit PAYE face enforcement action including business premise closure.
Q6. What is NITA and does it apply to all Kenya employers?
NITA (National Industrial Training Authority) is a training levy of 0.5% of total gross employee payroll per quarter, paid by the employer only. It applies to establishments with 5 or more employees. NITA is remitted quarterly via the NITA portal within 9 days after each quarter end. Employers who run NITA-approved industrial training programmes can offset part of the levy against training costs, subject to NITA approval.
