NAIROBI, Kenya, Feb 2 – The National Treasury has proposed sweeping tax relief measures that would exempt Kenyans earning Sh30,000 or less from income tax, a move expected to benefit about 3.5 million salaried workers.
Treasury Cabinet Secretary John Mbadi said the government is considering raising the tax-free income threshold from Sh24,000 to Sh30,000, effectively removing Pay As You Earn (PAYE) obligations for low-income earners.
Speaking during a Budget and Privatisation Public Engagement Forum at Kiambu National Polytechnic, Mbadi said taxing workers earning Sh30,000 places an unfair burden on households already struggling with the rising cost of living.
“This is a survival wage. It is not the kind of income where the government should still be seeking to levy taxes,” he said.
Mbadi argued that a monthly income of Sh30,000 is insufficient to meet basic needs such as rent, food, transport and education, leaving workers with little disposable income to support the wider economy.
Under the proposed tax changes, the Treasury also plans to reduce tax rates for workers earning up to Sh50,000, offering additional relief to middle- and lower-income households.
The Cabinet Secretary said freeing up income at the lower end of the wage scale would help stimulate consumer spending, particularly among small traders and farmers, where demand has slowed in recent months.
Mbadi said the proposal has the backing of President William Ruto and forms part of a shift toward a more citizen-centred fiscal framework ahead of the 2026/2027 budget cycle.
To compensate for revenue losses from the tax cuts, the government plans to accelerate the privatisation of state-owned enterprises and expand the tax base through improved use of technology and administrative reforms.
