Bonus, Overtime and Commission Tax Calculator Kenya 2026

Why a bonus looks like it is taxed more heavily

A bonus is not taxed at a special rate. It is added to your pay for the month in which you receive it, and the whole total is then taxed through the normal bands. Because your regular salary has already filled the lower bands, every shilling of the bonus lands in your highest band, which is why a bonus can lose 30% or more to tax. Overtime and commission paid in the same month are treated in exactly the same way.

The bonus also increases other deductions that are charged on gross pay. SHIF and the Housing Levy are percentages of gross pay, and NSSF rises until you reach the upper earnings limit. Those deductions are tax-deductible, so they slightly reduce the tax on the bonus, but they still reduce what you keep.

How the calculator measures it

It runs your payroll twice: once for a normal month, and once with the bonus added. The difference between the two runs is the cost of the bonus. The result shows:

• the extra PAYE caused by the bonus;
• the extra NSSF, SHIF and Housing Levy;
• the amount of the bonus you actually keep;
• the share of the bonus lost to deductions;
• your net pay and your marginal tax rate with and without the bonus.

A worked example

With a basic salary of KES 100,000 and a bonus of KES 50,000 paid in the same month, the extra PAYE is KES 14,218.50, and the bonus you keep after all deductions is KES 33,176.50.

Ways to reduce the tax on a bonus

None of these is a loophole: they are ordinary features of the system.

• Pension contributions. Paying part of a bonus into a registered pension scheme is deductible within the monthly cap, so it reduces taxable pay. Enter the contribution in the PAYE calculator to see the effect.
• Timing. Because tax is calculated month by month in payroll, a bonus paid in a month when your other pay is lower can attract less tax. Your annual return later reconciles the position, so timing mainly affects cash flow.
• Spreading. Some employers agree to pay a bonus in instalments across months. The total pay is the same, but each month's marginal band can be lower.

Overtime and commission

Both are taxable earnings. Overtime has a legal minimum rate of pay on normal days and rest days, which you can calculate with the overtime calculator. Commission is taxed in the month it is paid, even if it relates to work done earlier. The annual return gives some relief where income was taxed at a higher band in one month than the annual position justifies.

Limits of the estimate

The calculator assumes a regular salary and a single extra payment in the same month. If your pay varies each month, your marginal rate may be lower or higher. Special payments, such as terminal dues and retirement benefits, have their own treatment: use the terminal dues calculator for those.

The result is an estimate for information only. Your payroll team decides the figure actually deducted.

Checking your payslip against the result

When a bonus month's payslip looks wrong, compare four lines: the bonus added to gross pay, the extra NSSF, the extra SHIF and Housing Levy, and the PAYE for the month. If NSSF did not rise, your pay may already have been above the upper earnings limit, which is normal. If PAYE is far higher than the calculator shows, check whether your payroll applied your insurance and mortgage reliefs that month. A bonus is taxed within the month's payroll, but your annual return later reconciles the year, so a genuine over-deduction can come back to you as a refund.

Guides, tools and templates for this topic

Read next: How PAYE is calculated in Kenya, step by step, NSSF contributions explained: tiers, limits and what you pay, Gross pay versus net pay: how to negotiate a salary in Kenya

Related calculators: PAYE Calculator, Terminal Dues Tax Calculator, Overtime Pay Calculator

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