The Kenya Revenue Authority (KRA) has announced updates to the Pay-As-You-Earn (PAYE) computation following the implementation of the Tax Laws (Amendment) Act, 2024.
In a notice to the public, KRA said the changes apply to the new deductibles in taxable employment income effective December 27, 2024.
They include:
1. New Deductibles in Taxable Employment Income:
- Affordable Housing Levy as per the Affordable Housing Act, 2024.
- Contributions to a post-retirement medical fund, capped at KSh 15,000 per month.
- Contributions to the Social Health Insurance Fund (SHIF).
- Mortgage interest deductions of up to Ksh.360,000 annually (Ksh.30,000 monthly) for loans taken to improve or purchase owner-occupied residential premises.
- Contributions to registered pension or provident funds, with limits set at Ksh.360,000 per year (Ksh.30,000 monthly).
2. Ceased Tax Reliefs:
- Affordable Housing Relief.
- Post-Retirement Medical Fund Relief.
3. Gains and Profits Exclusions:
- Benefits with an aggregate value below Ksh.60,000 annually (Ksh.5,000 monthly).
- Meal benefits worth up to Ksh.60,000 annually (Ksh.5,000 monthly).
- Employer gratuities of up to Ksh.360,000 annually for registered retirement schemes.
What this means is that salaried Kenyans will see an increase in what they take home on their pay slips, coming at a time when majority have complained of economic hardships due to new deductions introduced by President William Ruto’s administration since he took power in September 2022.
