NAIROBI, Kenya- Workers earning below Sh50,000 will not enjoy the promised Pay As You Earn (PAYE) tax cuts after the proposals were omitted from the Finance Bill 2026 tabled in Parliament, sparking criticism from employees, economists and civil society groups.
Earlier this year, Treasury Cabinet Secretary John Mbadi had announced plans to exempt workers earning below Sh30,000 from PAYE altogether, while those earning between Sh30,000 and Sh50,000 were expected to benefit from a reduced tax rate of 25%, down from the current 30%.
The proposals had raised hopes among millions of salaried Kenyans grappling with rising living costs and multiple statutory deductions, including the housing levy, SHA contributions and NSSF deductions.
However, the Finance Bill 2026 published by the National Treasury did not include the anticipated PAYE restructuring, effectively delaying the tax relief measures.
The omission has triggered backlash, with former Law Society of Kenya President Faith Odhiambo questioning why the government abandoned a proposal that had already been publicly promised to Kenyan workers.
“On PAYE, Kenyans were led to expect relief and a restructuring of the tax bands to ease the burden on salaried workers. That proposal does not appear in this Bill,” Odhiambo said.
Treasury CS Mbadi had earlier promised that the reforms would be introduced through a Tax Laws (Amendment) Bill before being consolidated into the Finance Bill 2026.
He said the measures were intended to cushion low-income earners and leave more disposable income in workers’ pockets.
Under the proposed changes, employees earning Sh30,000 and below would have paid zero PAYE, while workers earning up to Sh50,000 were expected to benefit from lower deductions.
Analysts projected the reforms would increase take-home pay for thousands of workers struggling with inflation and high taxes.
The Treasury has since defended the omission, saying the government is pursuing broader tax reforms aimed at widening the tax base instead of relying heavily on salaried workers for revenue collection.
Officials also said public participation on the Finance Bill is still ongoing and changes could still be considered during parliamentary debate.
The Finance Bill 2026 seeks to raise an additional Sh120 billion in revenue as the government battles mounting public debt and increasing expenditure pressures.
