National Treasury Cabinet Secretary John Mbadi has provided a fresh timeline on the government’s proposed Pay As You Earn (PAYE) reforms, revealing that the process is expected to be completed by the end of September.
Speaking during a media briefing on Tuesday, August 11, Mbadi explained that he would spend the next month consulting Kenyans and other stakeholders before drafting the necessary legislation.
The Cabinet Secretary revealed that the Treasury had received alternative proposals to its earlier recommendations, including suggestions from the banking industry.
“I have a month to do public participation and get people’s opinions. We had suggested between Ksh30,000 and Ksh50,000 but there are other Kenyans, especially the Kenya Bankers Association, who have come up with another suggestion,” he stated.
Mbadi said the government would evaluate the various proposals together with feedback collected during the public participation exercise before settling on the final changes.
He explained that the agreed proposals would subsequently be incorporated into a Tax Laws Amendment Bill, which would be submitted to Parliament for consideration.
“We want to put them together and then prepare the Tax Laws Amendment Bill, which I will bring to Parliament. Before the end of September, I will be done,” he stated.
Any changes to the existing PAYE system will still require parliamentary approval before becoming law.
Mbadi’s remarks come amid growing uncertainty over proposed changes expected to affect millions of salaried Kenyans, with concerns mounting over whether the government would honour its earlier commitment to reduce deductions from workers’ earnings.
President William Ruto had directed the Treasury to formulate measures aimed at easing the tax burden on employees, with the reforms initially expected to form part of the 2026 tax legislation.
Under the Treasury’s earlier proposal, employees earning up to Ksh30,000 would have been exempted from PAYE, while workers earning between Ksh30,000 and Ksh50,000 would have benefited from a reduced tax rate of 25 per cent.
However, the proposed relief was left out of the Finance Bill 2026, raising fresh questions over when the government would implement the promised PAYE changes.
The proposed reforms come against the backdrop of growing concerns among workers over shrinking disposable incomes as the cost of living continues to rise.
On Monday, the Federation of Kenya Employers (FKE) called for broader PAYE bands and lower tax rates, arguing that heavy deductions were cutting into employees’ take-home pay while placing additional pressure on businesses.
FKE Executive Director Jacqueline Mugo also pointed to the tax burden as one of the factors contributing to growing dissatisfaction among workers.
