Kenya Statutory Deductions: PAYE, NSSF, SHIF, AHL
What every Kenyan employer must deduct from pay - PAYE, NSSF, SHIF and the Housing Levy - with current rates, a worked example and due dates.
By Paul Omondi, Founder & CTO · Updated
Every employer in Kenya deducts four statutory amounts from employees' pay: PAYE, NSSF, SHIF and the Affordable Housing Levy. The employer also pays its own share of NSSF and the Housing Levy on top of salary. Here is how each one works, with the rates in force today.
The rates at a glance
| Deduction | Employee | Employer |
|---|---|---|
| NSSF | 6% of pay up to KES 108,000 (max KES 6,480) | 6%, same limit |
| SHIF | 2.75% of gross pay, minimum KES 300 | None |
| Affordable Housing Levy | 1.5% of gross pay | 1.5% of gross pay |
| PAYE | Banded, on taxable pay (see above) | None (the employer remits it) |
Rates last verified 2026-10-16.
How PAYE is worked out
PAYE is income tax, charged on taxable pay, which is gross pay minus the employee's NSSF, SHIF and Housing Levy contributions (and any registered pension contribution, relieved together with NSSF up to a monthly cap). The bands are applied to taxable pay, then the monthly personal relief is subtracted:
| Monthly taxable pay (KES) | Rate |
|---|---|
| 0 - 24,000 | 10% |
| 24,001 - 32,333 | 25% |
| 32,334 - 500,000 | 30% |
| 500,001 - 800,000 | 32.5% |
| Above 800,000 | 35% |
Personal relief: KES 2,400 a month. Rates last verified 2026-10-16.
The Finance Act, 2026 left these bands and the KES 2,400 monthly personal relief unchanged. A proposal announced in October 2026 to zero-rate the first KES 32,333 of monthly pay had not become law when this guide was last updated - the rates above are the ones in force.
A worked example
For an employee earning KES 50,000 a month:
| Monthly gross KES 50,000 | KES |
|---|---|
| NSSF (employee) | 3,000 |
| SHIF | 1,375 |
| Housing Levy (employee) | 750 |
| Taxable pay | 44,875 |
| PAYE (after relief) | 5,846 |
| Net pay | 39,029 |
The employer also pays NSSF and the Housing Levy on top of the KES 50,000, so the total cost of this employee is higher than their gross pay.
Kenya PAYE calculatorWork out net pay and every deduction for any salary.When to remit
All four amounts fall due in the days after each payroll month:
- PAYE - to KRA through iTax, by the 9th of the following month. Filing late costs the higher of 25% of the tax due or KES 10,000.
- NSSF - to NSSF, by the 9th of the following month. Paying late adds a 5% penalty for each month, or part of one, that it stays outstanding.
- SHIF - to the Social Health Authority, by the 9th of each month (SHIF Regulations, 2024). Late remittance adds 2% per month, and employees with arrears can be turned away from care until they are settled.
- Affordable Housing Levy - to KRA, declared on the PAYE return (sheet M) and paid not later than the ninth working day after the end of the month (Affordable Housing Act, 2024).
At the end of the year, give each employee a P9 form showing their pay and tax for the year, so they can file their own return.
Common mistakes
- Taking the employer's share from the employee. Employer NSSF and the Housing Levy are the employer's cost.
- Using old NSSF limits. The NSSF earnings limits rose in February 2026.
- Ignoring the SHIF minimum. SHIF has a monthly floor even for low earners.
- Paying PAYE on gross pay. Taxable pay is gross pay after NSSF, SHIF and the Housing Levy.
How Cazini handles this
Cazini payroll calculates PAYE, NSSF, SHIF and the Housing Levy for every employee, generates payslips and P9 forms, and pays salaries to M-Pesa and bank accounts when you finalize the run. Statutory rates are kept up to date centrally, and each company can set its own approved overrides. See payroll.
Sources
- KRA: Pay As You Earn
- KRA: Amendments to PAYE computation under the Tax Laws (Amendment) Act, 2024 - makes SHIF, the Housing Levy and capped pension contributions deductible before PAYE from December 2024
- KRA: Collection of the Affordable Housing Levy
- NSSF - Year 4 (February 2026) earnings limits: lower KES 9,000, upper KES 108,000, 6% each for employee and employer
- SHA: employer compliance notice on SHIF remittances
Frequently asked questions
What are the statutory deductions in Kenya?+
Employers in Kenya deduct four amounts from employees' pay - PAYE (income tax), NSSF (pension), SHIF (health insurance) and the Affordable Housing Levy - and also pay employer shares of NSSF and the Housing Levy.
Are NSSF, SHIF and the Housing Levy deducted before PAYE?+
Yes. Since December 2024, SHIF and the Housing Levy reduce taxable pay, as NSSF already did, so PAYE is charged on what is left after all three.
Who pays the employer share of NSSF and the Housing Levy?+
The employer. It is a cost on top of gross pay and must not be deducted from the employee's salary.
How do I calculate PAYE for one employee?+
Subtract NSSF, SHIF and the Housing Levy from gross pay to get taxable pay, apply the PAYE bands, then subtract the monthly personal relief. Cazini's free Kenya PAYE calculator does this for any salary.
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