Taxable Benefits and Allowances Calculator Kenya 2026

Benefits are taxed even when no cash changes hands

Income tax on employment covers more than salary. When an employer gives you something of value, such as the use of a car, a house, meals or a daily allowance, the law treats the value as extra pay and taxes it. The value is added to your gross pay in the month you get the benefit, so PAYE rises even though your bank deposit does not. The point of this calculator is to put a number on that value and show what it adds to your PAYE.

The benefits covered

Company car. If the employer owns the car, the taxable value each month is the higher of two measures: a percentage of the car's cost (2% a month), and a prescribed amount that depends on engine size. If the employer hires or leases the car, the taxable value is the hire charge. Anything you pay towards the car reduces the taxable amount.

Housing. For an ordinary employee, the benefit is the higher of the rent the employer pays and the fair market rent of the house. For a director the value is 15% of cash pay, and for an agricultural employee it is 10%. A rent contribution from the employee reduces the value.

Meals. Employer-provided meals are not taxed while their monthly value stays within a limit, currently KES 5,000. Above that limit the whole value becomes taxable.

Per diem. An allowance for travel is only tax-free up to a daily limit, currently KES 10,000. Any amount above the limit is taxable, multiplied by the number of days.

How the result is built

Each benefit you enter appears as its own line with a short explanation of how it was valued. The total taxable benefits are then added to your pay and the calculator compares your PAYE with and without them. The difference is the extra PAYE caused by the benefits.

A worked example

A company car costing KES 2,000,000 with a 2,000 cc engine is valued at the higher of 2% of its cost and the prescribed figure for its engine size. With a basic salary of KES 100,000, this adds KES 11,346.00 a month to PAYE. Change the engine size or cost and the valuation updates.

Why this matters for negotiations

Benefits can look cheaper than cash, but the tax cost is real. A benefit worth KES 40,000 a month taxed at 30% adds about KES 12,000 of PAYE even though you receive no cash. When you compare offers, compare after-tax value: a cash allowance, a car benefit and a housing benefit can each cost you different amounts in tax and levies.

Employers also have obligations: they must include the value of benefits in the payroll tax calculation, and in the annual employer return. If you are an employer and you have not been doing this, seek advice from a tax professional.

Points to watch

• Fair market rent. For housing, enter the higher of the rent paid and the market rent. If you do not know the market rent, use a comparable listing and keep the evidence.
• Prescribed rates change. The car engine-size table and the meal and per diem limits are held as editable rates and updated when KRA changes them. The "rates used" table on this page shows the current values.
• Other benefits. Some benefits, such as low-interest loans, school fees, utilities and club memberships, are also taxable but are not covered here. Ask KRA or a tax adviser.
• Employer-provided medical cover. Medical insurance for employees is often treated more favourably than cash. The treatment depends on the arrangement.

What the result is not

This is an estimate that follows the general rules. Special rules apply to certain employers, vehicles used partly for business, directors, and employees living in housing provided because of the nature of their work. Confirm your own position with KRA or a registered tax agent before relying on the figures.

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

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