The Affordable Housing Levy is a monthly charge on formal pay that funds the government's affordable housing programme. It appears on payslips beside PAYE, NSSF and SHIF, and it is paid by both the employee and the employer.

The rate

The levy is 1.5% of gross monthly pay from the employee and 1.5% from the employer. On a salary of KES 100,000 the employee pays KES 1,500, and the employer pays another KES 1,500 on top. The Housing Levy calculator works it out for any salary and shows the employer's share separately.

There is no upper limit, so the levy rises in step with pay. This is different from NSSF, which stops at an earnings ceiling; compare it with our guide to NSSF contributions.

How it affects PAYE

Between March and December 2024 the employee's levy gave rise to a relief of 15% of the amount, capped at KES 9,000 a month. From 27 December 2024 the law changed: the levy became a deduction from taxable pay, and the relief ended. The practical result is that your taxable pay is lower by the amount of the levy, which saves tax at your marginal rate.

For a salary of KES 100,000, taxable pay falls by KES 1,500 and the tax saving is around KES 450 at a 30% marginal rate. See the full sequence of deductions in how PAYE is calculated, or test your own pay in the PAYE calculator.

What employers must do

  1. Deduct 1.5% from each employee's gross pay.
  2. Add the employer's matching 1.5%, which is a business cost and not taken from the employee.
  3. Pay the total to KRA by the deadline, which is early in the following month. Check the date on your payment notice.
  4. Show the levy as a separate line on each payslip.

Missing a deadline attracts penalties and interest, which you can estimate with the KRA penalty calculator. To avoid this, many small businesses keep a log of what is due and when. The statutory remittance tracker shows every payroll deduction, the due date and the date you paid, and the monthly payroll workbook works out the levy for each employee automatically.

Budgeting for the employer's share

The employer's 1.5% is easy to forget when you set a salary budget. For ten employees on KES 60,000 each, it adds KES 9,000 a month to your costs. The staff cost and headcount budget planner includes it for every position, along with NSSF, so your total cost per hire is not understated.

Common questions

Do casual workers pay it? The levy applies to employment income, so it applies to casual employees as well when you pay them wages. The weekly casual wages sheet is a free way to keep those records.

Is it refundable? The rules on the levy and any benefit from it are set by the Affordable Housing Act. Ask KRA or a registered professional about your situation.

Keep reading

The levy is one of four payroll items every employer handles. Our guide to running payroll in Kenya puts them together, and the SHIF guide covers the health contribution.

Confirm the current levy rules and payment dates with KRA before relying on them.

If you are unsure how the levy appears on your payslip, compare the figure with your gross pay: the employee share is a flat percentage of gross, and the employer pays a matching amount on top. Keep your payslips and the levy receipts, because they are the evidence you need if KRA ever asks you to show what was deducted and paid over.