Understanding Gross Salary
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Your gross salary includes basic pay plus cash allowances such as house and commuter allowance, and the taxable value of any non-cash benefits. Not every item is taxable in the same way, so check the KRA rules for each.
For example, an employee with KSh 50,000 basic pay, KSh 20,000 house allowance, and KSh 5,000 in other taxable allowances has a gross salary of KSh 75,000. This figure is the base for PAYE and the other deductions. Always check your payslip.
Cash allowances are generally taxable. Some non-cash benefits are tax-free up to set limits, such as the first KSh 5,000 per month in non-cash benefits, so confirm the current limits on the KRA iTax portal.
Non-cash benefits such as a company car are valued under KRA prescribed rules and added to taxable income. Review your employment contract for the detail of your allowances.
Basic Salary Components
A typical salary breaks down into basic pay plus allowances. For example: basic pay KSh 40,000, house allowance KSh 15,000 (taxable), and a commuter allowance KSh 2,000. Identify the taxable portions for an accurate net salary.
Common elements include leave allowance, acting allowance, and hardship allowance, which vary by sector. Read your payslip to spot these.
| Component | Typically Taxable? | Notes |
|---|---|---|
| Basic Pay | Yes | Core monthly wage |
| House Allowance | Yes | Cash allowance |
| Commuter Allowance | Check limits | Confirm the current tax-free limit on iTax |
| Leave Allowance | Yes | Annual leave payment |
| Non-cash benefit (e.g. company car) | Yes | Valued under KRA prescribed rules |
Confirm the current tax treatment of each allowance on the KRA iTax portal, as limits can change.
Key Statutory Deductions
The main deductions are NSSF, SHIF (2.75% of gross), and the Affordable Housing Levy (1.5% of gross), plus PAYE on your taxable pay. Understanding these helps you calculate your net salary accurately.
These deductions reduce your gross to your net take-home pay. Check the iTax portal for the current rates and PAYE bands.
Start with gross salary, subtract NSSF, SHIF, and the housing levy, then apply PAYE. Employers handle this through payroll.
Review your payslip monthly. Look for basic salary, allowances, the statutory deductions, and the personal relief applied against your PAYE.
NSSF
NSSF is 6% from the employee and 6% from the employer of pensionable pay, split into Tier I and Tier II and capped at the upper earnings limit. Through January 2026 the maximum is KSh 4,320 per side per month; from February 2026 it rises to KSh 6,480 per side.
Confirm the current limits on the NSSF or KRA iTax portal. The figures below use the limits in force through January 2026.
| Monthly Pensionable Pay | NSSF Employee Deduction (through Jan 2026) |
|---|---|
| KSh 20,000 | KSh 1,200 |
| KSh 50,000 | KSh 3,000 |
| KSh 72,000 and above | KSh 4,320 |
For pay at or above the upper earnings limit, the employee share is capped at KSh 4,320 through January 2026 and KSh 6,480 from February 2026. NSSF reduces your taxable income for PAYE.
SHIF
SHIF replaced NHIF on 1 October 2024 and is charged at 2.75% of gross salary, with a minimum of KSh 300 per month and no upper cap. For a KSh 50,000 salary, SHIF is KSh 1,375.
SHIF is a deduction from taxable income under the Tax Laws (Amendment) Act 2024. The old graduated NHIF tables no longer apply.
- KSh 20,000 salary: KSh 550.
- KSh 50,000 salary: KSh 1,375.
- KSh 100,000 salary: KSh 2,750.
Confirm the current SHIF rate on the SHA or KRA iTax portal.
Affordable Housing Levy
The Affordable Housing Levy is 1.5% of gross from the employee, matched by a 1.5% employer share, under the Affordable Housing Act 2024. For a KSh 50,000 salary, the employee pays KSh 750.
It is a deduction from taxable income under the Tax Laws (Amendment) Act 2024. Employers remit it by the 9th of each month.
- KSh 20,000 salary: KSh 300 employee share.
- KSh 50,000 salary: KSh 750 employee share.
- KSh 100,000 salary: KSh 1,500 employee share.
Confirm the current rate on the KRA iTax portal.
Income Tax (PAYE) Calculation
PAYE uses five progressive bands: 10% on the first KSh 24,000, 25% on the next KSh 8,333, 30% up to KSh 500,000, 32.5% from KSh 500,001 to 800,000, and 35% above KSh 800,000 per month. You calculate it on your chargeable pay after the allowable deductions.
To find your net salary, subtract PAYE from your pay after the other deductions, then apply the personal relief. Use the KRA tax calculator on iTax to check.
Chargeable pay is your basic salary, allowances, and bonuses, less the allowable deductions. The bands apply progressively.
Confirm the current bands on the KRA iTax portal, since rates can change. Review your P9 form for annual reconciliation.
Tax Bands and Rates
The PAYE bands are: KSh 0 to 24,000 (10%), 24,001 to 32,333 (25%), 32,334 to 500,000 (30%), 500,001 to 800,000 (32.5%), and above 800,000 (35%), all monthly. The top rate is 35%, and it applies only above KSh 800,000 per month.
| Monthly Taxable (KSh) | 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% |
Example: for KSh 100,000 of taxable pay, the tax is KSh 24,000 at 10% (KSh 2,400), KSh 8,333 at 25% (KSh 2,083), and the remaining KSh 67,667 at 30% (KSh 20,300), totalling KSh 24,783 before relief. After the KSh 2,400 personal relief, the tax is KSh 22,383.
PAYE is computed on a cumulative basis over the tax year. Confirm the current bands and the personal relief on the KRA iTax portal.
Tax Relief and Exemptions
The personal relief is KSh 2,400 per month (KSh 28,800 per year). Insurance relief is 15% of premiums, capped at KSh 5,000 per month. Qualifying pension contributions are deductible up to KSh 30,000 per month.
- Personal relief: KSh 2,400 per month, applied against your PAYE.
- Insurance relief: 15% of premiums, capped at KSh 5,000 per month.
- Pension contribution: deductible up to KSh 30,000 per month for approved schemes.
- Mortgage interest relief: up to KSh 30,000 per month on an owner-occupied home.
For example, if your PAYE before relief is KSh 10,000, the KSh 2,400 personal relief brings it to KSh 7,600. Claim eligible reliefs through iTax under the Income Tax Act, and confirm the current caps on the KRA iTax portal.
Some income, such as certain gratuity, may be treated differently for tax, so confirm the current position on the KRA iTax portal.
How SHIF Replaced NHIF
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Health cover for formal employees is now provided through SHIF, which replaced NHIF on 1 October 2024 under the Social Health Insurance Act 2023. It is administered by the Social Health Authority.
Employers deduct SHIF at 2.75% of gross and remit it to the SHA. Check your payslip for the SHIF line alongside PAYE and NSSF.
SHIF is a deduction from taxable income under the Tax Laws (Amendment) Act 2024, so it reduces your chargeable pay before PAYE applies. The Affordable Housing Levy at 1.5% is a separate deduction.
For precise figures, use a salary calculator or your HR department, and verify against your payslip each month.
SHIF Deduction
SHIF is 2.75% of gross monthly salary, with a minimum of KSh 300 and no upper cap. To work it out, multiply your gross pay by 2.75%.
| Gross Monthly Salary (KSh) | SHIF at 2.75% (KSh) |
|---|---|
| 20,000 | 550 |
| 45,000 | 1,238 |
| 50,000 | 1,375 |
| 80,000 | 2,200 |
| 100,000 | 2,750 |
SHIF can cover the member and dependents, subject to SHA rules. Confirm the current rate and benefits on the SHA portal.
Employers remit SHIF monthly. Employees should confirm the deduction on their payslips and raise any issues with SHA.
Example: a worker earning KSh 45,000 pays SHIF of KSh 1,238 (2.75% of gross). Include this with NSSF and the housing levy when working out net pay.
Voluntary and Employer Deductions
Voluntary deductions such as pension contributions and HELB loan repayments also reduce take-home pay. Employers deduct these with your consent under the Employment Act.
These voluntary deductions appear on payslips alongside the statutory ones. Review your employment contract for the agreed terms.
Salary advances and HELB repayments are spread over months. Track them when calculating your net salary.
Employer deductions may also cover union dues or professional fees, with permission. They reduce your gross to your net pay.
Pension Contributions
Pension contributions to an RBA-approved scheme are deductible from taxable income, up to KSh 30,000 per month. For a KSh 50,000 salary, a 7.5% contribution is KSh 3,750.
To work out the effect, subtract your contribution from taxable income before applying the bands. For example, KSh 3,750 contributed on a KSh 50,000 gross reduces your chargeable pay.
Review your scheme annually for fees and returns. Use the iTax portal to confirm the deduction in your PAYE computation, and confirm the current cap on the KRA iTax portal.
Step-by-Step Net Salary Formula
Net Salary = Gross minus (NSSF + SHIF + Housing Levy + PAYE + any other deductions). Start with your total earnings and subtract the deductions in order.
First, determine your gross salary, including taxable allowances. Then subtract NSSF, SHIF at 2.75%, and the housing levy at 1.5%, which gives your chargeable pay.
Apply the PAYE bands to your chargeable pay, subtract the KSh 2,400 personal relief, then deduct any voluntary items. The result is your take-home pay.
Follow these steps against your payslip or via the iTax portal. Review your P9 form annually for reconciliation.
1. Calculate Gross Pay
Gross pay is your basic salary plus taxable allowances and the taxable value of benefits. For example, KSh 60,000 basic plus KSh 20,000 taxable allowances gives a gross of KSh 80,000.
Exclude items that are exempt or below the tax-free limit. Use this figure for the next steps.
2. Subtract NSSF, SHIF, and the Housing Levy
For the KSh 80,000 example, using the limits in force through January 2026: NSSF is KSh 4,320 (capped at the upper earnings limit), SHIF is KSh 2,200 (2.75% of gross), and the housing levy is KSh 1,200 (1.5% of gross). These three total KSh 7,720.
These are the main deductions that reduce gross to chargeable pay. Confirm the current NSSF cap on the NSSF or KRA iTax portal.
3. Determine Chargeable Pay
Chargeable pay is gross minus NSSF, SHIF, and the housing levy. In the example, KSh 80,000 minus KSh 7,720 is KSh 72,280.
This is the base for PAYE. Use the KRA tax calculator on iTax to confirm.
4. Compute PAYE Tax
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Apply the bands to the chargeable pay of KSh 72,280: KSh 24,000 at 10% (KSh 2,400), KSh 8,333 at 25% (KSh 2,083), and the remaining KSh 39,947 at 30% (KSh 11,984). That totals KSh 16,467 before relief.
Subtract the KSh 2,400 personal relief, giving PAYE of KSh 14,067. Qualifying pension contributions would reduce this further.
5. Add Voluntary and Other Deductions
Include any voluntary deductions such as pension contributions, salary advances, loan repayments, or union dues. For the example, assume KSh 1,000 in union dues.
Keep records of these for your own reconciliation.
6. Arrive at Net Pay
Net pay is gross minus all deductions. For the KSh 80,000 example: NSSF KSh 4,320 + SHIF KSh 2,200 + Housing Levy KSh 1,200 + PAYE KSh 14,067 + other KSh 1,000 = KSh 22,787. Net pay is about KSh 57,213.
This is your take-home pay. Verify it against your payslip and adjust for bonuses or arrears as needed.
Using Online Salary Calculators
You can use the KRA iTax PAYE calculator or a reputable Kenyan salary calculator to work out net pay. They apply the PAYE bands, NSSF, SHIF, and the housing levy. Verify the tool is up to date with the current rates.
Enter your basic salary, allowances, and reliefs to see your monthly tax and net pay. Cross-check the result against your payslip.
For accuracy, confirm that the calculator uses the current bands, the personal relief, SHIF at 2.75%, and the housing levy at 1.5%.
The KRA iTax portal is the most authoritative tool, since it uses official KRA rates.
Steps for the KRA iTax Portal
Log into the iTax portal with your KRA PIN and open the PAYE calculator. It uses the current income tax rules.
- Log into iTax with your credentials.
- Open the PAYE calculator.
- Input gross salary, allowances, and reliefs.
- Review the chargeable income and deductions.
- Download the summary for your records.
The portal applies the personal relief and recognised pension deductions. Use it monthly to match your payslip.
Confirm the current bands and reliefs on the portal, since rates can change.
Common Mistakes to Avoid
A common mistake is forgetting the KSh 2,400 personal relief, which is applied against your PAYE. Always check your payslip for it.
Verify your reliefs on the iTax portal and use the KRA calculator for an accurate net salary. Confirm any penalty position on the KRA iTax portal.
Other errors include using outdated bands or applying the wrong rate to a band. Review your figures monthly.
1. Applying the Wrong Bands
Using outdated tables miscalculates PAYE. The current bands run 10%, 25%, 30%, 32.5%, and 35%, with 35% applying only above KSh 800,000 per month.
Download the current bands from the iTax portal. For example, taxable income of KSh 50,000 spans the 10%, 25%, and 30% bands rather than a single flat rate.
Double-check the band each portion of income falls into, and verify your P9 form annually.
2. Excluding Reliefs
Leaving out reliefs inflates your tax. Include the personal relief of KSh 2,400 per month, and any insurance or pension relief you qualify for.
Claim eligible reliefs through iTax, and confirm the current caps on the KRA iTax portal.
Track your reliefs and reconcile them with your PAYE at year-end.
3. Using the Old NHIF Table
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NHIF was replaced by SHIF on 1 October 2024, so the old graduated NHIF table no longer applies. Use SHIF at 2.75% of gross instead.
Check that your payslip shows SHIF rather than an NHIF band. Confirm the current rate on the SHA or KRA iTax portal.
For a KSh 50,000 salary, SHIF is KSh 1,375, not a fixed NHIF band amount.
4. Ignoring Pension Relief
Not claiming the pension deduction means missing a reduction in taxable income. Qualifying pension contributions are deductible up to KSh 30,000 per month.
Submit your pension details through iTax so the deduction is recognised. Confirm the current cap on the KRA iTax portal.
This lowers your chargeable pay and so your PAYE.
5. New-Joiner Tax Not Corrected
If you join an employer mid-year, your employer may apply a higher provisional rate until your records are confirmed. Make sure your details are updated so the correct cumulative tax is applied.
Submit the correct details through the portal so the tax is computed accurately over the tax year.
Confirm any penalty position on the KRA iTax portal.
Frequently Asked Questions
How do Kenyan employees calculate their net salary?
Start with your gross salary and subtract NSSF, SHIF (2.75% of gross), and the Affordable Housing Levy (1.5% of gross) to get your chargeable pay. Apply the PAYE bands: 10% on the first KES 24,000, 25% on the next KES 8,333, 30% up to KES 500,000, 32.5% from KES 500,001 to 800,000, and 35% above KES 800,000 per month. Subtract the personal relief of KES 2,400 per month, then deduct any voluntary items such as a HELB loan. Use the KRA iTax portal to confirm the current figures.
What are the main deductions when calculating net salary?
The main deductions are PAYE (10% to 35%), NSSF (6% employee, capped at the upper earnings limit), SHIF (2.75% of gross, minimum KES 300, no cap), and the Affordable Housing Levy (1.5% of gross). Other possible deductions are HELB loans, union fees, or pension contributions. Confirm the current rates on the KRA iTax and NSSF portals.
How do the tax bands affect net salary?
The bands apply progressively to monthly taxable pay: KES 0 to 24,000 (10%), 24,001 to 32,333 (25%), 32,334 to 500,000 (30%), 500,001 to 800,000 (32.5%), and above 800,000 (35%). The personal relief of KES 2,400 per month is then applied against the tax. Confirm the current bands on the KRA iTax portal.
Can Kenyan employees use online tools to calculate net salary?
Yes. The KRA iTax PAYE calculator and reputable Kenyan salary calculators apply the current PAYE bands, NSSF, SHIF, and the housing levy. Enter your gross salary and reliefs, and verify the result against your payslip, since rates can change.
What role does NSSF play in net salary?
NSSF is 6% from the employee and 6% from the employer of pensionable pay, split into Tier I and Tier II and capped at the upper earnings limit. Through January 2026 the maximum is KES 4,320 per side per month, rising to KES 6,480 from February 2026. Only your share is deducted from gross to net. Confirm the current limits on the NSSF portal.
How have recent changes affected net salary?
SHIF replaced NHIF on 1 October 2024 at 2.75% of gross, and the Affordable Housing Levy at 1.5% of gross operates under the Affordable Housing Act 2024. Both are deductions from taxable income under the Tax Laws (Amendment) Act 2024. Use the current rates from the KRA iTax portal to calculate your net salary.