Kenya Payroll Guide 2026: PAYE, NSSF, SHIF, and What Employers Must Know

Kenya's payroll stack changed more between 2023 and 2026 than it did in the entire decade before. If you are running a small business and still processing payroll on a spreadsheet, the number that is most likely wrong right now is your NSSF deduction — because in February 2026, the National Social Security Fund raised its Tier II upper earnings limit from KES 72,000 to KES 108,000, which almost doubled the maximum employee contribution for mid-to-high earners.

This guide covers every statutory line on the 2026 Kenyan payslip, why each one changed, and a step-by-step worked example for a KES 50,000/month employee — the most common salary band for entry-to-mid-level staff in Kenyan SMEs.

What is on a 2026 Kenyan payslip

Five statutory deductions sit on every formal employee's payslip:

Deduction	Rate	Base	Who bears it
PAYE	10% → 35% progressive (5 bands)	Taxable income (gross minus allowable deductions)	Employee
NSSF Tier I	6%	First KES 9,000 of pensionable pay	Employee; matched by employer
NSSF Tier II	6%	KES 9,001 up to KES 108,000	Employee; matched by employer
SHIF (Social Health Insurance Fund)	2.75%	Gross pay, minimum KES 300/month	Employee
AHL (Affordable Housing Levy)	1.5%	Gross pay	Employee; matched 1.5% by employer

Plus, the employer pays NITA (National Industrial Training Authority) at KES 50 per employee per month — this is employer-only and never deducted from the employee's salary.

1. PAYE — the 2026 bracket table

Kenya PAYE is computed monthly against monthly thresholds. Do not annualise.

2026 monthly PAYE bands (KES), per KRA:

Band	Monthly taxable income range (KES)	Rate
1	First 24,000	10%
2	Next 8,333 (24,001 → 32,333)	25%
3	Next 467,667 (32,334 → 500,000)	30%
4	Next 300,000 (500,001 → 800,000)	32.5%
5	Above 800,000	35%

Personal relief: KES 2,400/month (KES 28,800/year) — subtracted from the computed PAYE amount, not from taxable income. Every resident employee gets this automatically.

Source: Kenya Revenue Authority — PAYE.

The 32.5% and 35% bands were introduced by the Finance Act 2023. Any payroll system still capping at 30% is under-deducting for employees earning above KES 500,000/month.

2. NSSF — the February 2026 update that changed everything

The NSSF Act 2013 introduced a phased contribution schedule. Each February since 2023, the earnings limits have increased. Here is where things stand from February 2026 (Year 4):

	Before February 2026	From February 2026
Tier I lower earnings limit	KES 8,000	KES 9,000
Tier II upper earnings limit	KES 72,000	KES 108,000
Employee Tier I	6% × KES 8,000 = KES 480	6% × KES 9,000 = KES 540
Employee Tier II (max)	6% × KES 64,000 = KES 3,840	6% × KES 99,000 = KES 5,940
Employee max total NSSF	KES 4,320	KES 6,480
Employer max total NSSF	KES 4,320	KES 6,480

Source: PaySpace — Kenya NSSF Contribution Limits Revised February 2026; Eliacc — New NSSF Rates Effective February 2026.

How Tier I and Tier II split for a KES 50,000 salary:

• Tier I: 6% × KES 9,000 = KES 540
• Tier II: 6% × (50,000 − 9,000) = 6% × 41,000 = KES 2,460
• Employee NSSF total: KES 3,000
• Employer NSSF match: KES 3,000

Note: the Tier II calculation is on earnings between the Tier I floor and the Tier II ceiling. For a KES 50,000 employee, the full band between KES 9,000 and KES 50,000 is used (KES 41,000), because the salary sits below the new KES 108,000 ceiling.

3. SHIF — the health contribution that replaced NHIF

The Social Health Insurance Fund (SHIF) replaced NHIF on 1 October 2024 under the Social Health Insurance Fund (SHIF) Act 2023.

Rate in 2026: 2.75% of gross pay, minimum KES 300/month, no upper cap.

The old NHIF graduated table (KES 150 to KES 1,700 based on gross salary band) is gone. SHIF is a flat percentage on gross — simpler to calculate, but higher for most employees. For a KES 50,000 salary: 2.75% × 50,000 = KES 1,375/month (versus a maximum of KES 1,700 under the old NHIF, but no banding arithmetic needed).

SHIF contributions are an allowable deduction before PAYE under the SHIF Act 2023. That means they reduce taxable income — a point that many payroll spreadsheets miss, overstating PAYE as a result.

4. The Affordable Housing Levy

The Affordable Housing Levy (AHL) became a settled, standalone statutory deduction from March 2024 under the Affordable Housing Act, 2024.

Rate: 1.5% of gross pay from the employee, matched by 1.5% from the employer.

AHL is also an allowable deduction before PAYE (confirmed from January 2024 under the Finance Act 2023 amendments). It applies to gross pay with no upper cap.

For a KES 50,000 salary: 1.5% × 50,000 = KES 750 employee + KES 750 employer.

5. Worked example — KES 50,000/month gross (from February 2026)

An employee on KES 50,000 monthly gross:

Step 1: Calculate statutory deductions that reduce taxable income

Deduction	Rate	Base	Amount (KES)
NSSF Tier I (employee)	6%	9,000	540.00
NSSF Tier II (employee)	6%	41,000	2,460.00
SHIF	2.75%	50,000	1,375.00
AHL (employee)	1.5%	50,000	750.00
Total allowable deductions			5,125.00

Step 2: Taxable income

50,000 − 5,125 = KES 44,875

Step 3: Apply the PAYE bracket table

Band	Range	Taxable amount	Rate	Tax (KES)
1	0 – 24,000	24,000	10%	2,400.00
2	24,001 – 32,333	8,333	25%	2,083.25
3	32,334 – 44,875	12,541	30%	3,762.30
Gross PAYE				8,245.55
Less personal relief				(2,400.00)
Net PAYE				5,845.55

Step 4: Net pay

Line	KES
Gross pay	50,000.00
Less: NSSF (Tier I + Tier II, employee)	(3,000.00)
Less: SHIF	(1,375.00)
Less: AHL (employee)	(750.00)
Less: PAYE (net of relief)	(5,845.55)
Net pay	39,029.45

Employer's additional on-costs (not visible on payslip):

Item	Amount (KES)
NSSF employer match (Tier I + Tier II)	3,000.00
AHL employer match (1.5% × 50,000)	750.00
NITA levy (flat)	50.00
Total employer on-costs above gross	3,800.00

The true cost to the employer for a KES 50,000 gross employee is KES 53,800/month.

6. Remittance deadlines

Obligation	Deadline	Portal
PAYE	9th of the following month	KRA iTax
NSSF contributions	9th of the following month	NSSF employer portal
SHIF contributions	9th of the following month	SHA portal
AHL	9th of the following month (via KRA iTax)	KRA iTax
NITA levy	20th of the following month	NITA portal
HELB (for employees with active loans)	15th of the following month	HELB portal

Late PAYE remittance attracts a penalty of 5% of the unpaid amount plus interest at the Central Bank Rate plus 1%, per the Tax Procedures Act, 2015.

7. HELB — what employers need to know

The Higher Education Loans Board (HELB) deduction is not a universal statutory deduction — it only applies to employees who have active HELB loan repayment obligations. However, when it does apply, the employer is legally required to:

1. Deduct the HELB-specified repayment amount from the employee's salary
2. Remit it to HELB by the 15th of the following month
3. Notify HELB when a new employee with an active HELB loan joins

Failure to notify or remit attracts a fine of not less than KES 3,000 per month per the Higher Education Loans Board Act, 1995, as amended.

Source: CFL Advocates — Employer's Guide to Deduction of Dues in Kenya.

8. Common payroll mistakes in Kenya in 2026

1. Still using pre-February 2026 NSSF rates. The Tier I floor moved from KES 8,000 to KES 9,000 and the Tier II ceiling from KES 72,000 to KES 108,000. A spreadsheet frozen at the old numbers underdeducts and underremits for every employee — which KRA and NSSF will reconcile against you.

2. Computing SHIF on basic salary instead of gross. SHIF at 2.75% applies to gross pay. This was the same error many employers made when transitioning from NHIF. On a KES 50,000 employee with KES 10,000 allowances, getting this wrong means under-remitting KES 275/month per employee.

3. Forgetting that SHIF and AHL reduce taxable income. Both are allowable deductions before PAYE. Not subtracting them overstates taxable income and therefore PAYE — you deduct too much from the employee and remit too much to KRA. The employee is entitled to a refund they probably will not ask for.

4. Missing the NSSF Tier II ceiling for high earners. For employees earning above KES 108,000/month, NSSF Tier II is capped at KES 5,940 (employee) + KES 5,940 (employer). Do not compute 6% of the full salary above KES 9,000.

5. Applying the 30% PAYE ceiling. The five-band system has been law since July 2023. Any payroll system that caps PAYE at 30% under-deducts for anyone earning above KES 500,000/month.

6. Ignoring NITA. It is only KES 50/month per employee, but it is employer-mandatory and falls outside the payslip. Many small businesses miss it entirely and discover it only when NITA starts audit correspondence.

Does AnooreHR handle Kenya payroll?

AnooreHR treats Kenyan PAYE, NSSF, SHIF, and AHL as profile-driven deductions. The Kenya tax profile pack holds brackets, the NSSF phased upper-limit schedule, the SHA base, and personal relief — so when NSSF updates the Tier II ceiling each February, the change lands via profile update, not a manual spreadsheet fix.

Kenya is on the AnooreHR 2026 country rollout. Want to be among the first Kenyan businesses to run payroll on AnooreHR when it goes live? Book a demo and we will show you the Kenya profile pack alongside the Nigeria flow already in production.