Ruto Proposes Tax Relief for Health Insurance, Retirement, and Housing
The government has put forth a proposal for tax relief on contributions directed toward the Social Health Insurance Fund (SHIF), the post-retirement medical fund, and the affordable housing levy. This move aims to alleviate the tax burden on Kenyan citizens, especially given recent tax revisions.
President William Ruto’s administration introduced this proposal as part of the Finance Bill 2024.
According to the bill’s stipulations, contributions made to these funds will be treated as deductible expenses when computing taxable income. This implies that individuals and businesses can deduct these contributions from their adjusted gross income (AGI), thereby lowering their income tax liabilities.
The Finance Bill intends to eliminate existing reliefs on contributions made to the National Health Insurance Fund and the affordable housing scheme, thus simplifying the tax treatment of health and housing-related contributions.
Previously, individuals paying premiums for medical insurance or the National Health Insurance Fund could claim relief of up to 15 percent of the amount paid, with a maximum cap of Ksh60,000.
Similarly, individuals saving for affordable housing could enjoy relief of 15 percent of their contributions, up to Ksh108,000 annually. However, these reliefs are now proposed to be abolished.
ALSO READ:
- I have no blood on my hands, Ruto says on killed protesters
- Ruto Scraps Off Office of First Lady, Announces Firings in His Office
- Kenya To Borrow Ksh.1 Trillion After Finance Bill Rejection to Run Government
- Foreign Affairs PS Sing’oei Slams Gov’t Over Alfred Keter’s Abduction
- Kimani Ichung’wah Withdraws Land Laws Amendment Bill
These proposed changes aim to streamline the tax system and ensure equitable treatment of contributions across various schemes.
If approved, contributions to SHIF, post-retirement medical funds, and the affordable housing levy will be fully deductible for tax purposes, offering taxpayers more comprehensive benefits for their contributions.
Moreover, the Finance Bill delineates specific provisions for allowable expenses, including SHIF contributions by every Kenyan household and non-Kenyan resident residing in Kenya for more than twelve months. It also encompasses employer deductions under the Affordable Housing Act and contributions to post-retirement medical funds, subject to defined limits.
The Kenya Revenue Authority (KRA) has already commenced the deduction of the affordable housing levy from March payslips as per a directive. This levy, set at 1.5 percent of monthly gross earnings, is aimed at financing the government’s housing program.
Despite initial announcements, the implementation date for SHIF contributions is scheduled to commence on July 1. Under SHIF, Kenyans will now contribute 2.75 percent of their gross salaries towards health insurance, deviating from the Ministry of Health’s initial timetable.
Ruto Proposes Tax Relief for Health Insurance, Retirement, and Housing