Ruto Proposes PAYE Relief for Low-Income Earners in Major Tax Reform Plan
William Ruto has unveiled a major proposal aimed at reducing the tax burden on salaried Kenyans, announcing plans to exempt workers earning up to Sh30,000 per month from paying Pay As You Earn (PAYE) tax if Parliament approves the changes.
Speaking during the National Prayer Breakfast held in Nairobi on Thursday, May 28, President Ruto said the government was reconsidering the pressure placed on low-income earners amid the rising cost of living affecting many households across the country.
The President revealed that he had already directed the National Treasury to prepare formal proposals for submission to Parliament.
“I told the Treasury that it is time we slow down, especially for low-income earners, and ease some of the tax burden on them,” Ruto stated.
Under the proposed reforms, the PAYE exemption threshold would be increased from the current Sh24,000 to Sh30,000, meaning employees earning within that bracket would no longer pay income tax.
According to the President, the move could create an estimated Sh40 billion revenue gap for the government in the short term. However, he defended the proposal as part of broader efforts to support struggling households, boost disposable income, and stimulate economic activity.
The announcement comes at a time when high statutory deductions on salaries have sparked widespread public debate, with many workers complaining about reduced take-home pay due to increased taxes and mandatory contributions.
If approved, the proposal would mark one of the biggest personal income tax reforms in recent years and could significantly impact millions of Kenyan workers.
President Ruto said the government was still exploring alternative ways to offset the expected revenue loss without imposing additional pressure on lower-income citizens.
The proposed reforms also align with recommendations recently submitted during public participation on the Finance Bill 2026, where the Kenya Bankers Association called for lower PAYE rates to encourage consumer spending and support economic growth.
KBA Chief Executive Raimond Molenje argued that easing the tax burden could eventually expand the tax base and strengthen long-term government revenue collection.
The government now faces the challenge of balancing household relief with the need to maintain adequate funding for public services during a period of tight fiscal conditions.
For many workers at the lower end of the income scale, however, the proposal could translate into bigger monthly pay packets if lawmakers approve the changes.
