Relief as government slashes tax on incomes for low earners
Incomes of Sh13,486 p.m will attract taxes at 10 per cent, Sh13,487 attracts a 15 per cent up to Sh23,886 per month, up from the current Sh21,715
Speaking in parliament when he presented the budget proposals, National Treasury Secretary Henry Rotich said the increase in tax bands was informed by the need to boost the take-home pay of low-income earners.
In 2016, the government did a similar review taking effect in January this year, offering workers up to Sh600 of tax amnesty.
Kenya’s public servants lowest band starts at Sh11,180 per month while the upper band falls on incomes from Sh42,782 per month. It is from the upper band that the maximum 30 per cent tax rate is applied.
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In the new proposed changes, however, workers will only pay taxes if their income is at least Sh13,486 per month, with the upper band falling on incomes above Sh46,960 per month.
This means therefore that incomes of Sh13,486 per month will attract taxes at 10 per cent, Sh13,487 attracts a 15 per cent up to Sh23,886 per month, up from the current Sh21,715
Incomes beyond the second band up to Sh36,473 will be taxed at 20 per cent, with the rates rising to 25 per cent on incomes up to Sh46,960 per month.
On the other hand, incomes in a portion of incomes above the Sh46,960 falls in the uppermost band that will attract the top tax rate of 30 per cent.
Personal relief on taxes, in addition, will up by 10 per cent, from the current flat rate of Sh1,280 per month.
“This measure will, to a large extent, increase the take-home income of a majority of low income earners,” Mr Rotich said.
He added: “I wish to confirm that the exemption of bonuses, overtime and retirement benefits paid to the low-income earners will remain.”
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