NAIROBI, Kenya- Workers earning below Sh30,000 per month will not receive the anticipated tax relief in the 2026/27 budget, despite earlier promises by President William Ruto and Treasury Cabinet Secretary John Mbadi to exempt low-income earners from Pay As You Earn (PAYE) tax.
Presenting the KSh4.8 trillion budget for the 2026/27 financial year on Thursday, Mbadi did not include the proposed PAYE exemption in the budget measures, raising questions over the fate of a pledge that had been widely welcomed by workers.
However, the Treasury CS assured Kenyans that the proposal has not been abandoned and remains under active consideration by the government.
“I want to assure you that the promise will be implemented,” Mbadi said, reiterating that discussions are ongoing on how best to execute the measure without creating a significant revenue shortfall.
Earlier this year, the government announced plans to raise the tax-free income threshold from Sh24,000 to Sh30,000, effectively eliminating PAYE deductions for more than 1.5 million workers earning below the proposed threshold.
The proposal also included reducing the tax rate for workers earning between Sh30,000 and Sh50,000.
President William Ruto had publicly backed the initiative, saying workers earning up to Sh30,000 should no longer pay income tax as part of efforts to ease the cost-of-living burden on low-income households.
Mbadi previously explained that implementing the proposal immediately could create a revenue gap of about Sh30 billion, forcing the Treasury to explore alternative sources of revenue before rolling out the relief.
The Cabinet Secretary said the government is still evaluating amendments that could be introduced before the Finance Bill 2026 is passed by Parliament at the end of June.
If approved, the reforms would mark one of the biggest tax relief measures for salaried workers in recent years and fulfill a key promise made by the Kenya Kwanza administration.
