Kenya Payroll Deductions Guide: PAYE, NSSF, SHIF, Housing Levy
A practical formulaic guide to Kenyan employment deductions, statutory deadlines, tax relief credits, and compliance under the Employment Act and KRA guidelines.
1. Pay As You Earn (PAYE) Tax Bands
PAYE is a graduated personal income tax deducted from monthly employment earnings. Under the latest Kenya Revenue Authority (KRA) framework, personal relief is KES 2,400 per month (KES 28,800 annually). Tax bands start at 10% on the first KES 24,000, progressing through 25%, 30%, 32.5%, and capping at 35% for high-income earners.
2. National Social Security Fund (NSSF)
NSSF contributions are governed by Tier I and Tier II limits. Both the employee and employer contribute an equal 6% of pensionable earnings up to the lower and upper earnings limits, establishing a combined pension contribution that provides social safety coverage.
3. Social Health Insurance Fund (SHIF)
Replacing the legacy graduated NHIF table, SHIF mandates a uniform deduction of 2.75% of gross monthly income (subject to statutory minimums) directly remitted to fund universal healthcare in Kenya.
4. Affordable Housing Levy (AHL)
The Affordable Housing Levy requires an employee contribution of 1.5% of gross monthly salary, which the employer matches with an additional 1.5%, totaling 3.0% remitted monthly to KRA.
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