Kenya payroll in 2026: PAYE, NSSF, SHIF and Housing Levy with worked examples

Kenyan payroll in 2026 follows one order: take off NSSF, SHIF and the Affordable Housing Levy first, then apply the PAYE bands to what is left, then subtract personal relief. Getting that order wrong is the most common reason payslips and KRA records disagree. This guide sets out each step with the current figures and three worked examples.

What changed for 2026

Two changes matter most for this year's payslips.

• NSSF Year 4 limits from 1 February 2026. The lower earnings limit rose to KES 9,000 and the upper earnings limit to KES 108,000, with employee and employer each still paying 6% (PwC). Tier I is therefore KES 540 each, and Tier II is up to KES 5,940 each, so the maximum employee contribution is KES 6,480 a month.
• SHIF and the Housing Levy reduce taxable pay. KRA lists both the Affordable Housing Levy and Social Health Insurance Fund contributions as allowable deductions in arriving at taxable employment income (KRA). Some older calculators still treat them as reliefs or as after-tax deductions; that understates net pay.

The PAYE bands themselves have not changed. Monthly, they are 10% on the first KES 24,000, 25% on the next KES 8,333, 30% on the next KES 467,667, 32.5% on the next KES 300,000 and 35% above KES 800,000, with personal relief of KES 2,400 a month (KRA).

The calculation, step by step

1. Gross pay: salary plus taxable allowances and benefits.
2. NSSF (employee): 6% of pay up to KES 9,000 (Tier I) plus 6% of pay between KES 9,000 and KES 108,000 (Tier II).
3. SHIF: 2.75% of gross salary, with a minimum of KES 300 a month (EY).
4. Housing Levy (employee): 1.5% of gross monthly salary. The employer pays a matching 1.5%.
5. Taxable pay = gross − NSSF − SHIF − Housing Levy (and any registered pension contribution, up to KES 30,000 a month in total).
6. Tax from the bands, minus personal relief of KES 2,400 = PAYE.
7. Net pay = gross − NSSF − SHIF − Housing Levy − PAYE.

Worked examples

For illustration, three monthly salaries with no other benefits, pension or insurance relief:

Take the KES 100,000 salary. NSSF is 6% of 100,000, which is KES 6,000, because the salary is below the KES 108,000 ceiling. SHIF is KES 2,750 and the Housing Levy KES 1,500, leaving taxable pay of KES 89,750. Tax is KES 2,400 on the first 24,000, KES 2,083.25 on the next 8,333 and 30% of the remaining 57,417 (KES 17,225.10), a total of KES 21,708.35. Less relief, PAYE is KES 19,308.35.

For the employer, the cost of that employee is at least the gross salary plus matching NSSF (KES 6,000) and the employer's Housing Levy (KES 1,500): KES 107,500, before the NITA levy and any other benefits.

You can check any salary with our free Kenya PAYE calculator, which uses these rules.

Deadlines and penalties

PAYE must be paid and the return filed on iTax by the 9th of the following month. KRA's penalties are steep: late filing costs the higher of 25% of the tax due or KES 10,000; late payment adds 5% of the tax plus interest of 1% a month; and failing to deduct tax costs the higher of 25% of the tax involved or KES 10,000 (KRA).

What to do next

• Confirm your payroll system applied the new NSSF limits from February 2026 payroll, and correct any month it did not.
• Check that SHIF and the Housing Levy are deducted before PAYE on every payslip.
• Reconcile each month's PAYE, NSSF, SHIF and Housing Levy remittances to the payroll report before the 9th.
• Keep the evidence: payroll registers, remittance receipts and P9 forms for at least five years.

If you would rather not track these changes yourself, our payroll service runs Kenyan payroll monthly and files the statutory returns on time.

General information, not professional advice. Rules change; check the sources above or ask us before acting. Last reviewed 9 Nov 2026.