PAYE, or Pay As You Earn, is the income tax your employer deducts from your salary each month and pays to KRA on your behalf. The sum looks mysterious on a payslip, but it follows the same six steps every time. Once you can follow them you can check your own payslip, or test what a raise or a new job offer would really be worth.

Step 1: start with gross pay

Gross pay is your basic salary plus taxable allowances and benefits. Housing, transport and other cash allowances are normally added in. If you are unsure which benefits count, the taxable benefits calculator shows the taxable value of a company car, housing and meals.

Step 2: take off the deductions allowed before tax

Three statutory contributions come off before PAYE is worked out. Since December 2024 the law treats all three as deductible, so you are not taxed on money that goes straight to them:

What is left is your taxable pay.

Step 3: apply the tax bands

Monthly taxable pay is taxed in slices, and each slice has its own rate:

Slice of monthly taxable pay Rate
First KES 24,000 10%
Next KES 8,333 (up to 32,333) 25%
Next up to KES 500,000 30%
Next up to KES 800,000 32.5%
Above KES 800,000 35%

Only the part of your pay that falls in a slice is taxed at that slice's rate. A higher band never applies to the whole salary.

Step 4: subtract the reliefs

Tax from the bands is reduced by personal relief of KES 2,400 a month. If you pay premiums on a life, education or health insurance policy you may also claim insurance relief of 15% of the premiums, up to KES 5,000 a month. Try different amounts in the tax reliefs calculator.

Step 5: a worked example

Take a salary of KES 100,000 with no other allowances. NSSF at the February 2026 limits is KES 6,000, SHIF is KES 2,750 and the Housing Levy is KES 1,500, so the deductions total KES 10,250 and taxable pay is KES 89,750.

  • 10% of the first 24,000 = 2,400
  • 25% of the next 8,333 = 2,083.25
  • 30% of the remaining 57,417 = 17,225.10

The tax before relief is KES 21,708.35. Less personal relief of 2,400, PAYE is KES 19,308.35. Net pay is 100,000 less the deductions of 10,250 and PAYE of 19,308.35, which is about KES 70,441.65.

You can confirm the result in seconds with the PAYE calculator, which uses the same rates and shows each line.

Step 6: check the payslip

Compare the figures with your payslip. A common cause of a difference is a taxable allowance your employer has added, or a relief you have not yet declared. If you run a business and want payslips for staff, the free payslip generator workbook produces them in Excel, and the monthly payroll workbook handles up to 50 employees at once.

Where to go next

PAYE is only one part of employment tax. At the end of the year your employer issues a P9; see filing your employment return with a P9 to learn how to use it. If you want to work backwards from the pay you want to receive, the gross-to-net salary table lists the take-home pay for a whole range of salaries.

Rates change with each Finance Act, so always confirm against KRA before relying on a figure for a filing or a contract.