Members of Parliament have ignored recommendations from financial sector experts to reduce the maximum Pay-As-You-Earn (PAYE) income tax rate from 35% to between 28% and 30%, despite pressure from various stakeholders.
Instead, the National Assembly’s Finance and National Planning Committee has proposed several amendments to the Finance Bill 2026 that will lower some of the taxes initially proposed by the National Treasury.
The committee estimates that this move will reduce the expected revenue from the bill from Sh120 billion to Sh98.5 billion. This shortfall may force the government to borrow more to finance the Sh4.82 trillion budget for the 2026/2027 financial year.
During the public participation exercise, the Institute of Certified Public Accountants of Kenya (ICPAK), the Kenya Bankers Association (KBA), and Deloitte had recommended that employees earning below Sh30,000 per month should be exempt from PAYE.
