05
Feb
Tax Alert: Kenya PAYE Changes Effective Dec. 2024 and NSSF Changes Effective Feb. 2025
in Tax
Comments
– The Kenya Tax Laws (Amendment) Act, 2024
It was enacted on 27th Dec. 2024 and the following employment income taxation (PAYE) changes became effective from the PAYE period Dec. 2024 onwards:
- Amounts Deductible in Determining Taxable Pay – Effective Dec. 2024
- The pay slip amount deducted as Affordable Housing Levy (AHL) as per the Affordable Housing Act, 2024. Consequently, the previous AHL relief shall cease to apply.
- Contributions to a post-retirement medical fund, subject to a limit of KES. 15,000 per month.
- The pay slip contributions made to the Social Health Insurance Fund (SHIF). Consequently, the previous SHIF relief shall cease to apply.
- Mortgage interest, not exceeding KES. 360,000 per year (KES. 30,000 per month – up from KES. 25,000 per month), upon money borrowed by a person from one of the first six financial institutions specified in the Fourth Schedule of the Kenya Income Tax Act, to purchase or improve premises occupied by the person for residential purposes.
- Contributions made to a registered pension or provident fund or a registered individual retirement fund up to a limit of KES. 360,000 per year (KES. 30,000 per month – up from KES. 20,000 per month).
- Exempted Gains and Profits from Employment Income – Effective Dec. 2024
- The value of a benefit (non-cash), advantage, or facility granted in respect of employment, where the aggregate value is less than KES. 60,000 per year (KES. 5,000 per month – up from KES. 3,000 per month).
- The first KES. 60,000 per year (KES. 5,000 per month – up from KES. 4,000 per month) on the value of meals served in a canteen or cafeteria operated or established by the employer or a third party who is a registered taxpayer for the benefit of employees
- An amount not exceeding KES. 360,000 paid by an employer as gratuity or similar payment in respect of employment or services rendered for each year of service paid into a registered retirement pension scheme.
– The National Social Security Fund (NSSF) Act No. 45 of 2013
Further, in line with the Third Schedule of the NSSF Act No. 45 of 2013, effective 01.02.2025 (Year 3 NSSF Contribution rates), the NSSF LEL increases from KES. 7,000 to KES 8,000 and the NSSF UEL increases from KES. 36,000 to KES 72,000. The planned progression of these NSSF rates was covered in our previous alert here.
Sample our free UPDATED monthly PAYE calculator on the following link;
