Key Salary Changes for Kenyans Following the Tax Laws (Amendment) Act, 2024
After President William Ruto signed the Tax Laws (Amendment) Act, 2024, on December 13, which will be effective from December 27, the Kenya Revenue Authority (KRA) has highlighted the significant changes Kenyans will experience in their salaries starting at the end of this month.
In an official statement dated Thursday, December 19, the tax authority also addressed the confusion surrounding the calculation of December salaries.
KRA has clarified that the provisions of the new law will apply to the entire month of December. In other words, there will be no prorated application, resolving the uncertainty faced by finance professionals regarding the inclusion of these provisions in December salaries, particularly with the early payroll run due to the Christmas holidays.
This means that the Affordable Housing Levy and Social Health Insurance Fund contributions will be considered as allowable deductions for December 2024.
“Kenya Revenue Authority (KRA) informs employers and the public that, pursuant to the Tax Laws (Amendment) Act, 2024, which takes effect on December 27, 2024, the following changes will apply to the computation of PAYE for December 2024 and beyond,” the notice stated.
Starting in December, Kenyan pay slips are expected to show notable changes.
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According to KRA, deductible amounts in determining taxable employment income will include the Affordable Housing Levy, contributions to a post-retirement medical fund (up to Ksh15,000 per month), and contributions to the Social Health Insurance Fund (SHIF).
Additionally, it will include mortgage interest (up to Ksh360,000 per year or Ksh30,000 per month) and contributions to a registered pension, provident fund, or an individual retirement fund (up to Ksh360,000 per year or Ksh30,000 per month).
Non-taxable employment benefits and gains will not be subject to income tax.
This includes the value of any benefit, advantage, or facility granted in relation to employment, as long as the total value is less than Ksh60,000 per year or Ksh5,000 per month.
Meals provided by an employer with a value of Ksh60,000 per year or Ksh5,000 per month will also be exempt from income tax.
Gratitude payments from the employer, up to Ksh360,000 per year, will not be taxed either. Typically, these gratitude payments are made to the retirement pension scheme.
As Kenyans prepare for 2025, these changes may ease the financial burden for many households, offering them more disposable income.
Key Salary Changes for Kenyans Following the Tax Laws (Amendment) Act, 2024
