How To Calculate Paye In Kenya
What is this PAYE income tax calculator?
This is an independent calculator to help the public quickly understand and calculate Pay As You Earn (PAYE) income tax in Kenya as set out by the Kenya Revenue Authority (KRA). Employees and employers alike can use this calculator to under the statutory contributions liable under the income tax system of Kenya.
In this article Keweb. co tries to answer the question by publishing the ways one can calculate paye in Kenya
Below are the most helpful ways to calculate paye in Kenya
How is PAYE calculated?
PAYE income tax follows the progressive taxation system. Higher incomes are taxed more than lower incomes. The table below shows the income tax rates for different employee income brackets
| Taxable Income | Tax Rate |
|---|---|
| KSh.0 – KSh.12,298 | 10% |
| KES 12,999 – KES 23,885 | 15% |
| KES 23,886 – KES 35,472 | 20% |
| KES 35,473 – KES 47,059 | 25% |
| KES 47,059 and above | 30% |
What are the New KRA tax rates?
Effective 1st January 2018 new income tax brackets will come into effect for all salaried workers. The tax rates/percentages will remain steadfast with the highest tax rates at 30%. However, the different income/salary bands at which these tax rates will change, favor the lower income earners.
The new income brackets and new KRA PAYE tax rates used to calculate the net pay will be as follows :
| Taxable Income | Tax Rate |
|---|---|
| KSh.0 – KSh.12,298 | 10% |
| KES 12,999 – KES 23,885 | 15% |
| KES 23,886 – KES 35,472 | 20% |
| KES 35,473 – KES 47,059 | 25% |
| KES 47,059 and above | 30% |
What is the formula for calculating PAYE in Kenya?
Pay-As-You-Earn(PAYE) is the tax charged on income earned by employees in Kenya. The formula for calculating this income tax in Kenya uses the following simple steps:
- Step 1. Gross Income = Basic salary + allowances + commissions
- Step 2. Taxable Income = Gross Income – all deductions/exemptions allowed by law e.g. NSSF, private pension
- Step 3. From Taxable Income on step 2, Calculate marginal taxes by multiplying the total amount of taxable income in each successive tax bracket by its tax rate.
- Step 4. Total PAYE tax = Sum of the marginal taxes from step 3
- Step 5. Tax Payable = Total PAYE – Total Relief e.g. Personal Relief, Insurance Relief