Kenya payroll deductions, explained
Ever wondered why your net pay is so different from your gross? Here's exactly what comes off a Kenyan payslip each month — PAYE, SHIF, the Housing Levy and NSSF — in plain English.
Your gross salary is what you're offered. Your net pay is what actually reaches your account after statutory deductions. Understanding the four main deductions — and the reliefs that reduce your tax — helps you check your payslip, plan your budget, and run payroll correctly if you're an employer.
01 — Income Tax
PAYE (Pay As You Earn)
PAYE is the income tax deducted from your salary each month using progressive tax bands — the more you earn, the higher the rate on each additional shilling.
After the tax is computed, a personal relief of KES 2,400 per month (KES 28,800 per year) is subtracted from everyone's PAYE. Insurance and pension reliefs can reduce it further.
- 10% on the first KES 24,000
- 25% on the next KES 8,333 (up to KES 32,333)
- 30% up to KES 500,000
- 32.5% up to KES 800,000
- 35% above KES 800,000
02 — Health
SHIF (Social Health Insurance Fund)
SHIF replaced NHIF in October 2024. It is charged at 2.75% of your gross salary, with no upper cap, and is deducted from the employee each month.
Because there is no cap, higher earners contribute proportionally more than they did under the old fixed NHIF bands.
03 — Housing
Affordable Housing Levy (AHL)
The Affordable Housing Levy is 1.5% of gross salary from the employee, matched by 1.5% from the employer — a total of 3% of gross salary each month.
It applies to all employees in formal employment and is remitted alongside PAYE.
04 — Pension
NSSF (National Social Security Fund)
Under the NSSF Act 2013, contributions are split into two tiers, and the employee and employer contribute equally.
Tier I is 6% of the first KES 9,000 of gross (a maximum of KES 540 each side). Tier II is 6% of gross between KES 9,001 and KES 108,000 (a maximum of KES 5,940 each side).
- Tier I: 6% of first KES 9,000 → up to KES 540
- Tier II: 6% of KES 9,001–108,000 → up to KES 5,940
- Employee and employer each contribute the same amount
05 — Reliefs
Reliefs that lower your tax
Several reliefs reduce the PAYE you actually pay. Everyone gets the personal relief; the rest depend on your circumstances.
- Personal relief: KES 2,400/month for every employee
- Insurance relief: 15% of premiums, capped at KES 5,000/month
- Pension contributions: deductible up to KES 30,000/month
- Mortgage interest: deductible up to KES 30,000/month
- Post-retirement medical fund: up to KES 15,000/month
Worked Example
A KES 100,000 gross salary
On a gross of KES 100,000, the main employee deductions each month are roughly: SHIF at 2.75% (KES 2,750), the Housing Levy at 1.5% (KES 1,500), and NSSF (KES 6,480 at the Tier I + II maximums). PAYE is then calculated on the taxable income, less the personal relief of KES 2,400. Exact figures depend on your reliefs and pension contributions.
Rather than doing this by hand, use our free calculator — it applies the current rates and shows a full breakdown.
Common questions
How is PAYE calculated in Kenya?
PAYE uses progressive tax bands: 10% on the first KES 24,000, 25% on the next KES 8,333, 30% up to KES 500,000, 32.5% up to KES 800,000, and 35% above that. A personal relief of KES 2,400 per month is then deducted from the computed tax.
What is SHIF and what is the deduction rate?
SHIF (Social Health Insurance Fund) replaced NHIF in October 2024. The rate is 2.75% of gross salary with no upper cap, deducted from the employee each month.
What is the Affordable Housing Levy?
The Affordable Housing Levy (AHL) is 1.5% of gross salary from the employee and 1.5% from the employer — totalling 3% of gross salary per month. It applies to all employees in formal employment.
How is NSSF calculated?
Under the NSSF Act 2013: Tier I is 6% of the first KES 9,000 gross (max KES 540 each side). Tier II is 6% of gross between KES 9,001 and KES 108,000 (max KES 5,940 each side). Employee and employer contribute equally.
Calculate your exact net pay
Enter your gross salary and our free Kenya payroll calculator applies the current PAYE, SHIF, AHL and NSSF rules — with a full breakdown you can download.
Open the Payroll CalculatorThis guide is for general information and reflects rates effective 2025. It is not tax advice — confirm current figures with KRA or a qualified professional.