Payroll guide · Kenya
Everything an employer needs to run compliant payroll in Kenya — PAYE bands, statutory deductions, the computation order, filing deadlines and the mistakes that most often surface in an audit.
Running payroll in Kenya means getting five separate statutory deductions right every month, each with its own base, its own ceiling and its own filing deadline. Get one wrong and the penalty usually exceeds a year of payroll software.
This guide covers every deduction a Kenyan employer must handle in 2026 — PAYE, SHIF, NSSF Tier I and II, the Affordable Housing Levy and NITA — with the computation order, a worked example, the filing calendar and the mistakes that most often turn up in an audit.
Payroll obligations in Kenya are administered by Kenya Revenue Authority (KRA), alongside the social security and levy bodies set out below. Every employer is responsible for computing deductions correctly, remitting them on time and retaining the records — the obligation sits with the employer, not the employee, and it does not transfer to a bookkeeper or an accountant.
| Chargeable income (KES) | Rate |
|---|---|
| 0 – 24,000 | 10% |
| 24,001 – 32,333 | 25% |
| 32,334 – 500,000 | 30% |
| 500,001 – 800,000 | 32.5% |
| Above 800,000 | 35% |
Monthly chargeable pay in KES, resident employees.
| Deduction | Employee | Employer | Rules |
|---|---|---|---|
| NSSF Tier I | 6% | 6% | On pensionable pay up to 9,000. Maximum 540 each. Nothing is deducted below the 9,000 lower earnings limit. |
| NSSF Tier II | 6% | 6% | On pay between 9,001 and 108,000. Maximum 5,940 each. Combined NSSF cap 6,480. |
| SHIF | 2.75% | — | 2.75% of gross with a statutory minimum of KES 300 a month. Tax deductible. |
| Affordable Housing Levy | 1.5% | 1.5% | Applied on gross. Not applied where gross is below KES 24,000. |
| NITA | — | KES 50 | Flat employer levy per employee per month. |
| HELB | Per notice | — | Fixed amount as instructed by HELB. Not tax deductible. |
Our free calculator applies every deduction on this page — including lower earnings limits and relief caps — and shows the PAYE working band by band.
Open the Kenya calculator| Relief | Value | Notes |
|---|---|---|
| Personal relief | KES 2,400/month | Applied against gross tax. |
| Insurance relief | 15% of premiums | Capped at KES 5,000/month. |
| Mortgage interest | 15% | Capped at KES 25,000/month, owner-occupied. |
| Pension contributions | 100% deductible | Capped at KES 30,000/month. |
| PWD exemption | KES 150,000/month | Exempt income for registered persons with disabilities. |
Getting the order right matters more than getting any single rate right. Applying a deduction after the bands instead of before it changes the tax for every employee on the payroll.
Gross pay plus taxable benefits in kind — the first KES 5,000 of non-cash benefits and of employer meals is exempt — then less employee NSSF, SHIF, the housing levy, and allowable pension and mortgage deductions. That gives chargeable pay. Apply the bands, then subtract personal and insurance relief to reach PAYE. Net pay is gross less PAYE, NSSF, SHIF, the housing levy and any other deductions. NITA is an employer cost and is never deducted from the employee.
An employee on KES 120,000 gross:
Employer cost on top of gross: NSSF 6,480, housing levy 1,800 and NITA 50 — a total cost of employment of KES 128,330.
| When | What is due |
|---|---|
| By the 9th of the following month | PAYE remitted to KRA and the return filed on iTax |
| By the 9th | SHIF remitted |
| By the 9th | NSSF Tier I and Tier II remitted |
| By the 9th | Affordable Housing Levy remitted |
| By the 9th | NITA levy remitted |
| By 30 June | Employer annual return (P10) and employee P9 certificates issued |
KRA charges the greater of 25% of the tax due or KES 10,000 for a late PAYE return, plus 5% on late payment and 1% interest a month. NSSF and SHIF carry their own penalties on unremitted amounts. For an employer of sixty people, a single month's late PAYE filing typically costs more than a full year of payroll software.
These are the errors that turn up most often when a manual payroll is reviewed.
Our ROI calculator prices what manual payroll actually costs — the days lost at month-end, the leave nobody recorded, and the statutory penalty exposure you are already carrying.
Open the ROI calculatorPAYE is remitted and the return filed by the 9th of the month following the payroll period, through iTax. SHIF, NSSF, the housing levy and NITA share the same deadline.
SHIF is 2.75% of gross pay with a statutory minimum of KES 300 per month. It is deductible before PAYE bands are applied.
The combined employee contribution across Tier I and Tier II is capped at KES 6,480 a month. Tier I is a maximum of 540 and Tier II a maximum of 5,940. The employer matches both.
Often not. Lower earnings limits mean a casual on KES 5,600 gross pays the SHIF minimum of 300 and nothing else — NSSF, the housing levy and PAYE are all correctly nil because each falls below its threshold.
Yes. It is 1.5% from the employee and a matching 1.5% from the employer, so the true cost is 3% of gross.
P9 certificates are issued to employees and the P10 employer annual return filed by 30 June following the year of income.
CromaHR computes every deduction on this page automatically, with rates that are effective-dated — so a retrospective run uses the rates in force for that period rather than today's. Returns are generated in the formats Kenya Revenue Authority (KRA) actually accepts, and every run leaves a complete audit trail.
Because the platform was designed by a Certified Internal Auditor, the controls came first: maker-checker approval on payroll runs, role-based permissions, and a record of every change showing who made it, when, and what the value was before and after.
CromaHR supports payroll in 36+ countries. These guides cover the markets our customers ask about most.
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