Kenya Income Tax Rates 2026: Personal PAYE, Capital Gains and Corporation Tax
Kenya taxes employment, business and certain investment income under the Income Tax Act (Cap. 470), as amended. This guide explains the published individual tax bands, resident and non-resident rules, capital gains tax, corporate income tax and compliance requirements.
Individual income tax and PAYE rates
Section 3 of the Income Tax Act establishes the charge to income tax on income accrued in or derived from Kenya. PAYE (Pay As You Earn) is the employer withholding mechanism for taxable employment income. The progressive bands introduced under the Finance Act, 2023, apply from 1 July 2023 according to KRA PAYE guidance.
| Monthly taxable income band (KSh) | Annual band (KSh) | Marginal rate |
|---|---|---|
| First 24,000 | First 288,000 | 10% |
| Next 8,333 (approximately) | Next 100,000 | 25% |
| Next 467,667 (approximately) | Next 5,612,000 | 30% |
| Next 300,000 | Next 3,600,000 | 32.5% |
| Above 800,000 | Above 9,600,000 | 35% |
These are marginal rates: each percentage applies only to income within its band, not to the entire taxable salary. The annual thresholds are authoritative for annual computations; monthly figures are rounded where necessary.
Personal relief and allowable deductions
Eligible resident individuals receive personal relief of KSh 2,400 monthly or KSh 28,800 annually. Allowable deductions may include qualifying pension contributions (up to KSh 30,000 monthly), qualifying mortgage interest (up to KSh 30,000 monthly), and qualifying statutory contributions and medical fund contributions, subject to the Act and documentation. The KRA notice on the Finance Act, 2025 requires employers to apply supported reliefs, deductions and exemptions when calculating PAYE.
Resident and non-resident individuals
Residence determines eligibility for certain reliefs and how Kenya-source income is assessed. Under the Income Tax Act, an individual may be resident by having a permanent home in Kenya and being present during the relevant year, by being present for at least 183 days in the year, or by satisfying the statutory average-presence test across three years. The precise facts and any applicable double taxation agreement matter.
Non-residents can be taxed on Kenyan-source employment and other income. KRA states that taxable non-resident employment income is generally subject to the prevailing individual rates, but non-residents do not receive personal relief. See KRA individual income tax guidance.
Capital gains tax in Kenya
Capital gains tax (CGT) generally applies to taxable gains arising on transfers of property situated in Kenya, subject to statutory exclusions and exemptions. The applicable rate is 15% of the net gain, increased from 5% effective 1 January 2023. CGT is generally a final tax on the gain.
| Item | Rule |
|---|---|
| Standard CGT rate | 15% of net gain |
| General calculation | Transfer value less allowable transfer costs, adjusted acquisition costs and qualifying improvement costs |
| Liable person | Generally the transferor or seller |
| Payment timing | Earlier of receipt of full purchase price or registration of transfer instrument, according to KRA guidance |
For example, if allowable net gain is KSh 2,000,000, CGT at 15% is KSh 300,000. The law also addresses certain indirect transfers of interests in entities deriving value from Kenyan immovable property. Transfers of a qualifying private residence, certain family transfers and reorganisations may receive exemptions or exclusions if all conditions are met. See KRA capital gains tax guidance.
Corporate income tax rates
Corporation tax applies to chargeable company profits. A company may be resident if incorporated in Kenya or if management and control is exercised there, subject to the legal tests. The general KRA-published rates are shown below; special regimes may apply to qualifying enterprises.
| Company category | General rate |
|---|---|
| Resident company | 30% |
| Non-resident company with taxable Kenyan operations | 37.5% under KRA's published general guidance; verify the rate and permanent-establishment treatment for the relevant year |
| Qualifying incentive or special-regime entity | Depends on statutory eligibility and applicable incentive |
Relevant provisions include section 3 (charge of tax), section 15 (allowable deductions), section 16 (non-deductible expenditure) and section 18 (certain non-resident business arrangements) of the Income Tax Act. A permanent establishment generally means a sufficiently substantial fixed business presence or qualifying dependent-agent arrangement in Kenya. See KRA corporate taxation guidance and corporation tax FAQs.
Corporate tax incentives
Export processing zones, special economic zones and certain qualifying investments may benefit from special tax treatment. The former blanket descriptions of reduced rates for newly listed companies and residential housing projects should not be applied without checking the current incentive provisions and qualification criteria.
Tax filing and payment deadlines
- PAYE: Employers generally file and remit by the 9th day of the following month.
- Individual annual return: Generally due by 30 June following the year of income, where filing is required.
- Company income tax return: Generally due within six months after the accounting period ends.
- Installment tax: May apply where projected liability exceeds the statutory threshold; payment dates depend on the accounting period.
- CGT: Declare and pay according to the transfer and payment timing rules.
Returns and payments can be managed through the official KRA iTax portal.
Historical rates and changes since 2017
For context, Kenya's 2017 personal income tax schedule had five marginal bands of 10%, 15%, 20%, 25% and 30%. The present published PAYE structure instead has five bands of 10%, 25%, 30%, 32.5% and 35%. Capital gains tax increased from 5% to 15% effective January 2023. The standard resident corporation tax rate is 30%, following temporary pandemic-era adjustments in 2020.
Historical rates must not be used to compute current-year liabilities. For changes over time, consult the KRA 2021 rate change notice and the current official pages linked above.
Official sources and legal references
- KRA: PAYE rates, deductions and relief
- KRA: Individual income tax and non-resident rules
- KRA: Capital gains tax
- KRA: Companies and partnerships
- KRA: Finance Act 2025 employer guidance
This article provides general information and is not a substitute for checking the Income Tax Act (Cap. 470), current amendments, applicable treaties and KRA notices for the particular year of income.