What You Need to Know About Kenya Payroll Tax

Kenyan payroll is one of the most layered in East Africa. Beyond PAYE, you need to manage NSSF (which jumped to KES 6,480 per party in February 2026), SHIF at 2.75% of gross salary, and a Housing Levy at 1.5% matched by the employer. All four deductions share the same deadline: the 9th of the following month. This post unpacks each component so you can calculate accurately and remit on time.

1. What is Payroll Tax?

Payroll tax in Kenya covers the taxes and statutory contributions that employers must deduct from employee wages and remit to the relevant authorities. The main components are:

PAYE (Pay As You Earn): Personal income tax deducted at graduated rates from 10% to 30%, with a personal relief of KES 2,400 per month
NSSF (National Social Security Fund): Tiered contributions, with the maximum total contribution reaching KES 12,960 per month (split equally between employer and employee) as of February 2026
SHIF (Social Health Insurance Fund): 2.75% of gross salary contributed by the employee
Housing Levy: 1.5% of gross salary, matched equally by employer and employee

2. Who does it apply to?

This usually applies to:

All employers registered in Kenya
Employees earning above the first KES 24,000 monthly (tax-free threshold)
Both local and expatriate employees
Employers in all sectors (private, public, NGO)

3. Why does it matter?

Understanding payroll tax helps you:

Stay compliant with tax laws
Avoid penalties and late fees
Keep proper records
File and pay correctly
Plan your cash flow better

4. How does it work?

Here's the basic process:

Register as an employer on KRA's iTax portal
Register with NSSF and the Social Health Authority
Calculate PAYE using the progressive tax rates and apply the personal relief
Deduct NSSF employee contributions (up to KES 6,480 per month)
Deduct SHIF at 2.75% of gross salary
Deduct Housing Levy at 1.5% of gross salary
Add employer NSSF (up to KES 6,480) and Housing Levy (1.5%)
Submit the P10 PAYE return and pay by the 9th of the following month
Remit NSSF and SHIF by the 9th of the following month

5. What forms are involved?

P10 - Monthly PAYE return filed via iTax
P9A - Tax deduction card for each employee (annual record)
P10A - End-of-year PAYE certificate for each employee
NSSF Contribution Schedule - Monthly list of employee contributions
SHIF Remittance Form - Monthly health insurance contribution report

6. What information do you need?

Before handling payroll tax, make sure you have:

KRA PIN for each employee
NSSF membership numbers
Details of gross salary, allowances, and benefits for each employee
Records of any tax-exempt allowances
Insurance relief certificates (if applicable)
Previous payroll records and tax deduction cards

7. Important deadlines

Filing frequency: Monthly
Payment deadline: PAYE, NSSF, SHIF, and Housing Levy are all due by the 9th of the following month
Year-end requirements: Issue P9A tax deduction cards to employees by end of February. File annual PAYE reconciliation.

8. Common mistakes to avoid

Missing the 9th of the month deadline for all payroll remittances
Not updating NSSF contribution rates (they changed significantly in February 2026)
Failing to apply personal relief of KES 2,400 per month when calculating PAYE
Not accounting for taxable benefits (company car, housing, insurance)
Deducting the wrong SHIF rate (2.75% of gross salary)
Not registering for the Housing Levy
Using outdated PAYE tax tables

9. Simple example

An employee earns KES 100,000 per month.

NSSF (February 2026 rates):

Tier 1 employee: KES 9,000 x 6% = KES 540
Tier 2 employee: (KES 100,000 - KES 9,000) = KES 91,000, but capped at KES 99,000 x 6% = KES 5,940
Total employee NSSF: KES 6,480
Employer matches: KES 6,480

SHIF: KES 100,000 x 2.75% = KES 2,750

Housing Levy:

Employee: KES 100,000 x 1.5% = KES 1,500
Employer: KES 100,000 x 1.5% = KES 1,500

PAYE:

Taxable income: KES 100,000 - KES 6,480 (NSSF) - KES 2,750 (SHIF) - KES 1,500 (Housing) = KES 89,270
PAYE (after progressive rates and KES 2,400 personal relief): approximately KES 19,500

Total deducted from employee: KES 6,480 + KES 2,750 + KES 1,500 + KES 19,500 = KES 30,230 Total employer cost above salary: KES 6,480 + KES 1,500 = KES 7,980

10. FAQ

Q: What are the current PAYE tax brackets? A: The first KES 24,000 is at 10%, KES 24,001 to KES 32,333 at 25%, and above KES 32,333 at 30%. A personal relief of KES 2,400 per month is deducted.

Q: What changed with NSSF in 2026? A: From February 2026, Year 4 rates took effect. The maximum monthly contribution is now KES 12,960, split equally at KES 6,480 each for employer and employee.

Q: Is SHIF mandatory? A: Yes. All employees must contribute 2.75% of their gross salary to the Social Health Insurance Fund.

Q: When are payroll taxes due? A: All payroll remittances (PAYE, NSSF, SHIF, Housing Levy) are due by the 9th of the following month.

Q: What is the Housing Levy? A: A 1.5% contribution on gross salary, matched equally by the employer and employee, to support affordable housing initiatives.

11. Final takeaway

Kenya's payroll tax includes PAYE, NSSF, SHIF, and Housing Levy, all due by the 9th of each month, so accurate calculations and timely filing on iTax are essential.

Caption

What you need to know about Kenya payroll tax: Deduct PAYE, NSSF (up to KES 6,480), SHIF (2.75%), and Housing Levy (1.5%), and remit everything by the 9th of each month via iTax.

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