How CS Mbadi’s Tax Cuts Plan Will Change Kenyan Payslips in 2026
How CS Mbadi’s Tax Cuts Plan Will Change Kenyan Payslips in 2026
What Workers Will Really Take Home — Explained Simply
Author: Postine Ngeli
Published: February 2026
Website: MoneyMarketHubKenya
Why This Payslip Story Matters
If you’re a salaried Kenyan, your payslip often tells a frustrating story. You work hard all month, but by the time deductions are done, the amount that finally hits your bank account feels far smaller than expected.
That is why the latest proposal by National Treasury Cabinet Secretary John Mbadi has caught national attention.
In early 2026, the Treasury announced proposed tax cuts aimed at reducing PAYE for low- and middle-income earners. If implemented, these changes would directly affect how much money workers take home every month — especially those earning KSh 50,000 and below.
This article explains what the proposal means, how payslips may change, and who stands to benefit — using clear, non-technical language.
What Exactly Is CS Mbadi Proposing?
Key Changes Explained Simply
1. PAYE exemption for low earners
Workers earning KSh 30,000 or less per month would pay zero PAYE. This means no income tax deduction on payslips.
2. Reduced tax for lower-middle incomes
Workers earning between KSh 30,000 and KSh 50,000 would:
- Enjoy a tax-free first KSh 30,000
- Pay a reduced tax rate (around 25%) on income above that level
3. Focus on take-home pay
The goal is to leave more disposable income in workers’ pockets to cope with the rising cost of living.
How Payslips Will Change in Real Terms
Example 1: Worker earning KSh 30,000
Under the proposal, PAYE would be zero. This means the worker takes home more money without any salary increase.
Example 2: Worker earning KSh 50,000
The first KSh 30,000 would be tax-free. The remaining KSh 20,000 would be taxed at a lower rate, resulting in less PAYE deducted than under the current system.
Result: Higher monthly take-home pay.
Who Benefits the Most?
- Low-income earners
- Young professionals
- Teachers, nurses, and junior civil servants
- Private-sector workers earning below KSh 50,000
These are the workers most affected by PAYE deductions and rising living costs.
What About High-Income Earners?
High-income earners are not the main target of the proposal. However, they may still benefit indirectly through adjusted tax bands and improved relief structures.
How the Government Plans to Balance Revenue
The Treasury says reduced PAYE collections will be offset by:
- Broadening the tax base
- Improving tax compliance
- Bringing more informal income into the tax system
What This Means for Your Financial Planning
If approved, the proposal gives workers extra breathing space. Extra income can be redirected to savings, investments, or emergency funds.
Learn more about safe savings options here:
What Is a Money Market Fund in Kenya?
And how to stretch your income better:
How to Stretch Your Monthly Income
Important Reality Check
This tax cut is still a proposal. It must be approved by Parliament and formally implemented before any changes appear on payslips.
Final Thoughts
If passed, CS Mbadi’s tax cuts would mark a major shift in Kenya’s PAYE system — offering meaningful relief to low- and middle-income workers and increasing take-home pay.
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About the Author
Postine Ngeli is a Kenyan finance writer and independent researcher focusing on tax policy, PAYE, and personal finance education. He simplifies government policies so everyday Kenyans can understand how their money is affected.
Credentials:
Independent Finance & Tax Policy Researcher
founder of MoneyMarketHubKenya
About MoneyMarketHubKenya
MoneyMarketHubKenya is a personal finance education platform helping Kenyans make informed decisions about taxes, savings, money market funds, and income growth.
Disclaimer
This content is for educational purposes only. Tax laws and government proposals may change. This article does not constitute financial, legal, or tax advice. Always consult official sources or professionals.
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