Kenya Employment Taxation Changes as at Feb. 2026
- NSSF Changes Effective Feb. 2026
In line with the Third Schedule of the Kenya NSSF Act No. 45 of 2013, effective 01.02.2026 (Year 4 NSSF Contribution rates), the NSSF LEL increases from KES. 8,000 to KES 9,000 and the NSSF UEL increases from KES. 72,000 to KES 108,000. The planned progression of these NSSF rates was covered in our previous alert here. Sample too our free UPDATED monthly PAYE calculator here.
- Kenya Finance Act Changes (Income Tax – Employment & Personal) Effective July 2025
a) Per diems (subsistence allowances)
What changed
Daily tax‑free cap increases to KES 10,000 (from KES 2,000).
What it means
Lower payroll friction for field work and travel; update policies and payroll systems.
b) Gratuity from pension schemes
What changed
Gratuity from registered public and private schemes is exempt.
What it means
Unified treatment across schemes; review retirement packages accordingly.
c) Mortgage interest relief
What changed
Relief now covers construction as well as purchase/improvement of a residential home.
What it means
May boost mortgage uptake for self‑builds; lenders to adjust product documentation.
d) Pension income exemptions — rationalized
What changed
Several legacy exemptions for pension/annuity lump sums and death benefits are repealed.
What it means
Policy nudges longer‑term saving; retirees should reassess withdrawal timing and tax outcomes.
e) Expatriate employment reliefs — repealed
What changed
Certain exemptions for expatriates (regional HQ staff, >120 days out of Kenya, etc.) are removed.
What it means
Potentially higher employment costs for regional hubs; revisit assignment structures and gross‑up terms.
- Kenya Tax Laws (Amendment) Act 2024 Changes Effective Dec. 2024
Employment income taxation (PAYE) changes introduced by this Act were covered in our previous alert here.
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