---
title: "Kenya Tax and Payroll 2026 | PAYE, NSSF, SHIF, AHL"
description: "Kenya payroll 2026: employer NSSF 6% plus AHL 1.5%, five PAYE bands to 35%, all remitted by the 9th."
canonical: https://www.teamed.global/country-hiring-guides/kenya/tax-and-payroll
---

Kenya · Tax & payroll child

Served by Teamed vetted partner-entity network in Kenya

# How does *Kenya payroll tax* work in 2026?

From February 2026 the NSSF Upper Earnings Limit jumped from KES 72,000 to KES 108,000/month. That alone raises the maximum employer pension contribution to KES 6,480. Stack SHIF at 2.75% and the Housing Levy at 1.5% on top, and the payroll picture in Kenya looks nothing like it did a year ago.

Last reviewed 13 June 2026 · Kenya guide

![Nairobi skyline at golden hour with modern office towers rising above the city.](/images/country-guides/kenya-tax-payroll.webp)

Illustration · Nairobi, Kenya

Answer.cite this

Kenya employer payroll in 2026 has three parts. The employer pays NSSF at 6% on pensionable pay. The employer also pays the Housing Levy at 1.5% of gross salary.

The employee pays more out of their pay. NSSF takes 6%. SHIF health cover takes 2.75% of gross. The Housing Levy takes another 1.5%.

Income tax (PAYE) runs across five bands. It starts at 10% and rises to 35% on the highest pay. Everything is filed and paid monthly by the 9th of the next month.

![A hand counting Kenyan shilling banknotes on a wooden desk beside a payroll ledger.](/images/country-guides/kenya-tax-payroll-polaroid-1.webp)

Counting the shillings

## What does an employer pay in Kenya payroll taxes?

The employer pays NSSF at 6% of pensionable pay. The employer also pays the Affordable Housing Levy at 1.5% of gross salary.

NSSF is capped by an earnings limit. The Housing Levy is not. SHIF has no separate employer rate (Social Health Insurance Act 2023).

| Employer contribution | Rate | Applies to |
| --- | --- | --- |
| NSSF (pension) | 6% | Pensionable pay between the lower limit and KES 108,000/month |
| Affordable Housing Levy | 1.5% | Gross monthly salary, no ceiling |

### NSSF and the new earnings limit

NSSF is the National Social Security Fund, Kenya’s mandatory pension. The employer matches the employee at 6% of pensionable pay. From February 2026 the Upper Earnings Limit rose to KES 108,000/month, up from KES 72,000. The Lower Earnings Limit is KES 9,000/month. Because the ceiling moved, the maximum employer contribution is now KES 6,480 a month, and the combined employer-plus-employee maximum is KES 12,960 a month.

### Affordable Housing Levy

The Affordable Housing Levy was introduced by the Affordable Housing Act 2024. The employer pays 1.5% of each employee’s gross monthly salary, and the employee pays the same. There is no upper ceiling on the levy. It is remitted alongside PAYE by the 9th working day after the payroll month. Late payment carries a 3% per month penalty.

## What does an employee pay from their Kenya salary?

Three deductions come off the employee before income tax. NSSF takes 6% of pensionable pay. SHIF takes 2.75% of gross.

The Affordable Housing Levy takes a further 1.5% of gross. SHIF and the Housing Levy have no upper ceiling.

| Employee deduction | Rate | Applies to |
| --- | --- | --- |
| NSSF (pension) | 6% | Pensionable pay between KES 9,000/month and KES 108,000/month |
| SHIF (health) | 2.75% | Gross monthly salary, no ceiling |
| Affordable Housing Levy | 1.5% | Gross monthly salary, no ceiling |

### NSSF, the employee side

The employee contributes 6% of pensionable pay, matched by the employer. Contributions apply on earnings between the Lower Earnings Limit of KES 9,000/month and the Upper Earnings Limit of KES 108,000/month. The maximum employee contribution is KES 6,480 a month.

### SHIF replaced NHIF

SHIF is the Social Health Insurance Fund. It replaced the old NHIF under the Social Health Insurance Act 2023, in force from October 2024. The employee contributes 2.75% of gross monthly salary with no upper ceiling. A minimum of KES 300 a month applies to low-income earners. SHIF is deductible before PAYE is calculated, which lowers the taxable amount.

## Kenya PAYE income tax bands for 2026

PAYE runs across five bands. The first band is 10%. The next bands rise through 25%, 30%, and 32.50%.

The top band is 35% on the highest earnings. A personal relief of KES 2,400 a month reduces the tax due. The bands are unchanged for 2026 (Income Tax Act Cap 470).

| Annual income band | Rate |
| --- | --- |
| Up to KES 288,000/year | 10% |
| KES 288,001/year to KES 388,000/year | 25% |
| KES 388,001/year to KES 6,000,000/year | 30% |
| KES 6,000,001/year to KES 9,600,000/year | 32.50% |
| Above KES 9,600,001/year | 35% |

PAYE is calculated on a monthly basis. The annual bands above translate to monthly thresholds: 10% on the first KES 24,000 a month, then 25%, then 30%, then 32.50%, and 35% on monthly income above KES 800,000. Every employee gets a personal relief of KES 2,400 a month deducted from the tax due.

### What comes off before PAYE

PAYE is charged on taxable pay, which is gross pay less the allowable pre-tax deductions. NSSF contributions, SHIF, and the Affordable Housing Levy are deductible before PAYE is worked out, so the order of the calculation matters. Get the deduction order wrong and the tax figure is wrong, even when every rate is right. Teamed’s payroll applies the deductions in the correct order on every run.

## How does Kenya PAYE filing and remittance work?

Employers deduct PAYE each month and remit it to the Kenya Revenue Authority by the 9th of the next month.

The same 9th-of-month deadline covers NSSF, SHIF, and the Housing Levy. Miss it and PAYE late filing costs the higher of 25% of the tax due or KES 10,000.

KRA · Pay As You Earn (PAYE)

Employers must deduct PAYE from employee pay at the prevailing rates and remit it to the Kenya Revenue Authority on or before the **9th day of the following month**. Late filing carries a penalty of the higher of 25% of the tax due or KES 10,000. Late payment adds 5% of the outstanding tax plus 1% per month interest.

Source: [KRA: Pay As You Earn (PAYE)](https://www.kra.go.ke/individual/filing-paying/types-of-taxes/paye)

Kenya payroll runs on a monthly cycle, with 12 pay periods a year. Every deduction is filed and paid by the 9th:

- **PAYE** to the Kenya Revenue Authority, by the 9th of the following month
- **NSSF** to the National Social Security Fund, by the 9th
- **SHIF** to the Social Health Authority, by the 9th
- **Affordable Housing Levy** to the Kenya Revenue Authority, by the 9th working day after the payroll month

Filing is done through the KRA iTax portal for PAYE, with separate portals for NSSF and SHIF. A single late month can trigger four separate penalties at once, because each fund runs its own penalty regime. The PAYE late-filing penalty alone is the higher of 25% of the tax due or KES 10,000.

1. Collect pay data Gather salary, hours, bonuses, and any taxable benefits for the pay period before the run closes.
2. Apply pre-tax deductions Deduct NSSF, SHIF, and the Affordable Housing Levy first. These reduce the pay that PAYE is charged on, so the order matters.
3. Calculate PAYE Apply the monthly income tax bands to taxable pay, then subtract the monthly personal relief to reach the tax due.
4. Calculate employer contributions Work out employer NSSF and the employer Housing Levy on top of the employee deductions already taken.
5. Remit by the 9th File and pay PAYE, NSSF, SHIF, and the Housing Levy to their authorities by the 9th of the following month. Late filing triggers penalties on each fund.

## Pension and social funds in the Kenya payroll stack

NSSF is the mandatory pension. The employer pays 6% and the employee pays 6% of pensionable pay.

Both apply between KES 9,000/month and KES 108,000/month. The ceiling rose in February 2026 (NSSF Act 2013).

NSSF contributions are split into two tiers by earnings:

- **Tier 1** covers pensionable pay up to the Lower Earnings Limit of KES 9,000/month. At 6% this is KES 540 from each side.
- **Tier 2** covers pensionable pay from the Lower Earnings Limit up to the Upper Earnings Limit of KES 108,000/month. Employees may move Tier 2 to a contracted-out scheme with NSSF approval.

Because the Upper Earnings Limit climbed to KES 108,000/month from February 2026, the maximum contribution from each side is now KES 6,480 a month. That is a real increase in employer cost for any salary above the old KES 72,000 ceiling.

### SHIF and the Housing Levy are not pensions

SHIF funds health cover, not retirement, and the Housing Levy funds affordable housing. They sit in the same monthly payroll run as NSSF but serve different purposes. SHIF is 2.75% of gross from the employee. The Housing Levy is 1.5% from the employee and 1.5% from the employer. Housing Levy contributions earn a tax relief of 15%, capped at KES 9,000 a month.

## How does Teamed handle Kenya payroll for you?

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Kenya for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

PAYE, NSSF, SHIF, the Housing Levy, and the full Kenya employment law stack run on **one platform**.

**Real HR and legal experts** handle your Kenya hires, from the first offer letter through every monthly PAYE filing and fund remittance by the 9th. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Employer cost **passes through at cost, itemised** on every invoice, so you see NSSF, SHIF, and the Housing Levy as separate lines, never a blended mark-up.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A Kenya contractor who converts to payroll keeps their record. That same employee can **graduate** from EOR to your own Kenya entity without switching systems. Run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to see the full picture, including the February 2026 NSSF ceiling change. EOR is the right model for a first Kenya hire, **until it isn't**. Start from the Kenya hiring overview.

Key sources: [KRA Pay As You Earn](https://www.kra.go.ke/individual/filing-paying/types-of-taxes/paye), [NSSF contribution rates](https://www.nssf.or.ke/new-contribution-rates), and the [Employment Act 2007](https://new.kenyalaw.org/akn/ke/act/2007/11).

## Frequently asked questions

What does an employer pay in Kenya payroll taxes in 2026?

The employer pays NSSF at 6% of pensionable pay, up to the Upper Earnings Limit of KES 108,000/month, which caps the employer NSSF contribution at KES 6,480 a month. The employer also pays the Affordable Housing Levy at 1.5% of gross salary with no ceiling. SHIF has no separate employer rate.

What is deducted from a Kenya employee's salary?

Three contributions come off before income tax: NSSF at 6% of pensionable pay, SHIF health cover at 2.75% of gross, and the Affordable Housing Levy at 1.5% of gross. PAYE income tax is then charged on the taxable pay that remains.

What are the Kenya PAYE income tax bands for 2026?

PAYE has five bands: 10% on the first KES 288,000/year; 25% from KES 288,001/year to KES 388,000/year; 30% from KES 388,001/year to KES 6,000,000/year; 32.50% from KES 6,000,001/year to KES 9,600,000/year; and 35% above KES 9,600,001/year. A personal relief of KES 2,400 a month reduces the tax due. The bands are unchanged for 2026.

When must Kenya PAYE and payroll funds be filed?

PAYE is deducted monthly and remitted to the Kenya Revenue Authority by the 9th of the following month. NSSF, SHIF, and the Affordable Housing Levy share the same 9th-of-month deadline. PAYE late filing carries a penalty of the higher of 25% of the tax due or KES 10,000, and late payment adds 5% of the outstanding tax plus 1% per month interest.

How does NSSF work in Kenya in 2026?

NSSF is the mandatory pension. The employer and employee each pay 6% of pensionable pay between the Lower Earnings Limit of KES 9,000/month and the Upper Earnings Limit of KES 108,000/month. The ceiling rose from KES 72,000 in February 2026, lifting the maximum contribution from each side to KES 6,480 a month.

Teamed Legal Operations

The most common Kenya payroll mistake we see is treating the four funds as one deadline with one penalty. They share the 9th of the month, but PAYE, NSSF, SHIF, and the Housing Levy each run their own penalty regime. Miss one filing and you can be hit four times over before anyone notices the original slip.

A note from Tom Price-Daniel

Kenya payroll is not one tax, it is four. PAYE to KRA, NSSF pension, SHIF health, and the Housing Levy, all due by the 9th.  
The NSSF ceiling jumped to KES 108,000/month in February 2026, so employer cost rose for higher salaries.  
Get the deduction order right before you run the numbers.

Tom Price-Daniel · Co-founder, Teamed

## Related Kenya guides

- Hiring in Kenya, overviewparent
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Kenya Revenue Authority, the National Social Security Fund, and the Social Health Authority, or speak to a qualified professional, before relying on any specific framework. A 12% general minimum-wage increase was announced on 1 May 2026 but had not been gazetted as of June 2026, so the confirmed statutory wage still applies. The NSSF Upper Earnings Limit changed in February 2026 and remains subject to the NSSF Act phased schedule.