Every Payroll Deduction in Kenya (2026), And the Cost of Getting Each One Wrong
PAYE, NSSF, SHIF, Housing Levy, NITA. Current 2026 rates, the small print most payroll systems still miss, and what each one costs to get wrong.
If you run payroll in Kenya, five statutory deductions land on your desk every month. Miss one, calculate it wrong, or file it late, and the bill doesn’t go to the employee. It comes back to you, with penalties on top.
Here are the five, what each one actually costs, and the small print most payroll systems still get wrong.
What’s new in 2026: NSSF tier limits jumped on 1 February. The upper limit is now 108,000 KES, up from 72,000, so anyone earning above 72,000 is paying noticeably more. A proposal to zero-rate PAYE on the first 30,000 KES is under public discussion but has not been enacted. The bands and limits in this post are the current effective law.
At a Glance
| Deduction | Rate | Who Pays | Deadline |
|---|---|---|---|
| PAYE | 10–35% banded | Employee only | 9th of next month |
| NSSF | 6% tiered | Employee + 6% employer match | 15th of next month |
| SHIF | 2.75% of gross (min 300) | Employee only | 9th of next month |
| Housing Levy | 1.5% + 1.5% employer match | Both | 9th of next month |
| NITA | KES 50 per employee | Employer only | 10th of next month |
PAYE (Pay As You Earn)
Income tax, deducted from the employee, remitted by you. Under-deduct and KRA comes back for the shortfall, sometimes years deep, with retroactive penalties. The hardest thing about PAYE isn’t the math; it’s that your spreadsheet has been quietly getting the math wrong, and you only find out at audit.
2026 Monthly Tax Bands
| Monthly Income (KES) | Rate |
|---|---|
| Up to 24,000 | 10% |
| 24,001 - 32,333 | 25% |
| 32,334 - 500,000 | 30% |
| 500,001 - 800,000 | 32.5% |
| Above 800,000 | 35% |
Personal relief: 2,400 KES/month, comes off the calculated tax. Insurance relief: 15% of private health insurance premiums (separate from SHIF), capped at 5,000 KES/month. Deadline: 9th of the following month.
The bands apply to taxable income (gross minus NSSF, SHIF, Housing Levy), not to gross. Getting that subtraction wrong is the single most common payroll bug we see.
Worked example: employee on 80,000 KES
Taxable income: 80,000 − 4,800 (NSSF) − 2,200 (SHIF) − 1,200 (Housing Levy) = 71,800 KES.
Apply the bands:
- 24,000 × 10% = 2,400
- 8,333 × 25% = 2,083.25
- 39,467 × 30% = 11,840.10
- Calculated tax: 16,323.35
Less personal relief of 2,400 = PAYE 13,923.35 KES.
NSSF (National Social Security Fund)
Retirement contributions, split with the employer. The limits jumped in February 2026. If your payroll system didn’t update, you’ve been under-deducting on every cycle since.
2026 Rates (Effective February 1)
Employee: 6% of pensionable salary (effectively gross monthly pay). The base is capped at 108,000 KES, so the maximum monthly contribution is 6,480 KES. Employer match: Same amount on top, also capped at 6,480 KES. Deadline: 15th of the following month.
For a 30-person team averaging 50,000 KES, that’s roughly 90,000 KES deducted from employee paychecks each month, with the same again from the employer’s side.
SHIF (Social Health Insurance Fund)
Replaced NHIF in October 2024. A payslip that still carries an NHIF line is a Section 20 violation under the Employment Act and creates back-payment exposure when SHA audits begin. SHIF is also where the biggest payroll myth lives: there’s no employer match. The employer just deducts and remits.
2026 Rate
2.75% of gross salary, employee only. Minimum 300 KES per month, no upper cap. Deadline: 9th of the following month.
Housing Levy
The newest statutory deduction, and the one most payroll systems still get wrong in two ways: the rate, and the tax treatment. Both errors compound monthly.
2026 Rate
1.5% from the employee, plus a full 1.5% employer match. Total 3% of gross. A true match, not a split. Deadline: 9th of the following month.
Important: Since 27 December 2024, the Housing Levy is deductible from taxable income before PAYE is calculated. If your payroll system still applies PAYE to gross salary directly, your employees are overpaying income tax every month.
NITA (National Industrial Training Authority)
A flat employer-only levy that funds industrial training and skills development. Small enough to forget, costly enough to wish you hadn’t. Late NITA accrues a 5% penalty per month on the unpaid amount.
Rate: 50 KES per employee per month
Deadline: 10th of the following month
The Full Picture
Enter a salary. Every deduction at once: what comes out of the employee, what comes off the business, and the take-home that lands in someone’s M-Pesa.
Where to File
- iTax: PAYE, Housing Levy
- NSSF portal: NSSF
- eCitizen / SHA: SHIF
- NITA portal: NITA
Miss any deadline and penalties start accruing immediately.
Why This Matters
Five deductions. Five rates. Five deadlines. Sixty calculation points per employee per year. Sixty places something can go silently wrong while you’re focused on running the actual business.
Get it right and nobody notices. Get it wrong and everyone notices.
Kazisafi calculates all five automatically. Rates update when the law does. You run payroll, we generate the filing reports. No watching the gazette, no apologising to your team about an NHIF line on last month’s payslip.