The Kenya Revenue Authority has published a notice outlining changes to the PAYE computation following the enactment of the Tax Laws (Amendment) Act, 2024.

The following changes shall be applicable in the computation of PAYE for December 2024 and subsequent periods: 

  1. Amounts deductible in determining the taxable employment income shall include:
  • Amount deducted as Affordable Housing Levy pursuant to the Affordable Housing Act, 2024.
  • Contribution to a post-retirement medical fund subject to a limit of KES 15,000 per month.
  • Contributions made to the Social Health Insurance Fund (SHIF).
  • Mortgage interest, not exceeding Kshs. 360,000 per year (KES 30,000 per month), upon money borrowed by a person from one of the first six financial institutions specified in the Fourth Schedule to the Income Tax Act, to purchase or improve premises occupied by the person for residential purposes.
  • Contribution made to a registered pension or provident fund or a registered individual retirement fund up to a limit of Kshs. 360,000 per year (KES 30,000 per month).
  1. These Tax Reliefs shall cease to apply:
  • Affordable Housing Relief
  • Post-Retirement Medical Fund Relief
  1. Gains and Profits from employment shall not include:
  • The value of a benefit, advantage, or facility granted in respect of employment, where the aggregate value is less than KES 60,000 per year (KES 5,000 per month).
  • The first KES 60,000 per year (KES 5,000 per month) on the value of meals provided by an employer.
  • An amount not exceeding KES 360,000 paid by an employer as gratuity or similar payment in respect of employment or services rendered for each year of service paid into a registered retirement pension scheme.

The Tax Laws (Amendment) Act, 2024 will come into force on 27 December 2024. 

This development follows after Kenya’s President William Ruto signed the Tax Laws (Amendment) Bill 2024 and the Tax Procedures (Amendment) Bill 2024 into law on 11 December 2024.