The National Treasury plans to table legislation in September 2026 proposing changes to the Pay As You Earn (PAYE) tax system, with the aim of reducing income tax deductions for salaried employees.

National Treasury and Economic Planning Cabinet Secretary John Mbadi said the proposed reforms will first undergo public participation in August before the draft legislation is presented to Parliament.

Speaking on the planned review, Mbadi said the Treasury intends to gather public views before finalising the proposals.

“Next month I am embarking on public engagement to reduce the tax burden on payslips. By the end of August, after we have received views from Kenyans and submitted a report to the President, we will table legislation in September so that Kenyans get some relief on their payslips,” Mbadi said.

The Cabinet Secretary did not disclose the specific amendments the Treasury intends to make to the Income Tax Act. However, he said the objective is to reduce the tax burden borne by salaried workers through changes to the PAYE framework.

The announcement follows the government’s decision not to include previously proposed PAYE relief measures in the Finance Bill, 2026. At the time, the Treasury cited fiscal constraints and competing expenditure priorities as reasons for deferring the proposals.

PAYE is the system through which employers deduct income tax from employees’ salaries and remit it to the Kenya Revenue Authority (KRA). Any changes to the tax bands or rates require amendments to the Income Tax Act and approval by Parliament.

The proposed legislation will be subjected to the legislative process, including public participation, parliamentary committee review, debate in both Houses where applicable, and presidential assent before any changes can take effect.

Until that process is completed, the existing PAYE rates remain in force.

The proposed reforms are expected to complement the government’s ongoing review of the country’s tax framework, which has included consultations on measures intended to balance revenue collection with the tax burden on individuals and businesses.