Treasury Delays PAYE Relief Bill Again, Sets October Timeline

Treasury Delays PAYE Relief Bill Again, Sets October Timeline

The National Treasury has delayed plans to introduce proposed PAYE tax relief for salaried Kenyans, with Cabinet Secretary John Mbadi now saying public participation will begin in the first week of October 2026.

Mbadi had earlier indicated that Treasury would prepare and submit a Bill to Parliament by the end of September to facilitate changes to PAYE tax bands.

However, speaking on Tuesday, September 15, the Treasury CS said the government must first undertake public participation before presenting the proposals to lawmakers.

Mbadi said the process was being moved to October because September had a busy government schedule, including planned international engagements.

“It is coming. I will do the public participation first. Kenya has become what it is because of the Constitution that we have. If I bring them without public participation, someone might go to court to stop it. Sometimes it can be very discomforting.”

The CS said Treasury intends to conduct the public participation exercise during the first week of October before proceeding with the legislative process.

“This month is a bit crowded. I will do it immediately in the first week of October.”

Mbadi is also expected to participate in international financial meetings involving the International Monetary Fund and World Bank, which will form part of the government’s schedule as it works on the proposed tax reforms.

The Treasury CS said the government would communicate the proposals before completing the process of taking the Bill to Parliament.

“I will break it when I am going for the spring meeting, then come back and conclude it, then we process the Bill through the National Assembly.”

The proposed PAYE changes are expected to target lower-income salaried workers.

Earlier government proposals indicated that employees earning up to KSh30,000 per month could be exempted from PAYE.

Workers earning between KSh30,000 and KSh50,000 were also expected to benefit from a reduced PAYE rate of 25 per cent.

If approved, the proposed changes could reduce tax deductions for more than 3.4 million salaried workers across Kenya.

The proposals are part of wider government efforts to increase the disposable income of workers by reducing the amount deducted from their monthly salaries.

However, the measures still require legislative approval before they can become law.

Treasury will first have to undertake public participation before formally presenting the proposals to Parliament. Parliament will then consider the proposed amendments before determining whether to approve them.

The latest delay follows earlier government plans to include PAYE relief measures in the 2026 Finance Bill.

Those proposals were ultimately not included when the Finance Bill was enacted, leaving uncertainty over how the government would implement the promised tax relief.

The issue later returned to the spotlight after President William Ruto directed Treasury to prepare proposals aimed at reducing PAYE deductions for lower-income workers.

The presidential directive included a proposal to exempt employees earning below KSh30,000 from PAYE.

It also proposed reducing the PAYE rate to 25 per cent for workers earning below KSh50,000.

Mbadi subsequently committed to presenting the proposals to Parliament by September.

The October timeline now means salaried workers will have to wait longer for the proposed changes to move through the legislative process.

The government has maintained that public participation is necessary before the proposals can be formally introduced, allowing members of the public and other stakeholders to give their views.

Once the consultations are completed, Treasury is expected to finalise the proposals before submitting the Bill to the National Assembly.

For millions of salaried Kenyans, the key issue will be whether the proposed changes are eventually approved and when any new PAYE rates would take effect.

Until Parliament considers and passes the proposed legislation, the existing PAYE tax framework remains in force.

ALSO READ: KFS, Muthaiga Golf Club to Meet Over 21.8ha Karura Forest Land Dispute

Treasury Delays PAYE Relief Bill Again, Sets October Timeline