The President’s proposal seeks to eliminate Pay As You Earn (PAYE) on the first Sh32,000 of monthly earnings, an increase from the current Sh24,000 threshold.
According to the government’s framework, the change would remove PAYE on an additional Sh8,000 of income that currently falls within the 25 per cent tax band. The President said that this specific adjustment would result in a monthly tax saving of approximately Sh2,000 for workers in that bracket.
Ruto Proposes Removing PAYE on the First Ksh32,000 Earned
Back in August, Gachagua urged the state to pause the housing levy and re-examine PAYE tax bands to provide relief to salaried employees facing the high cost of living.
My competitors are sponsoring a debate saying they want to protect the payslip. We are proposing that we want to remove PAYE on the first Ksh32,000 on what you earn.
President William Ruto, speaking at the KECSHA meeting in Mombasa.
“Do you know the reason why I am doing this? It is because I have stabilised the economy,” the President said, arguing that the tax savings from the PAYE adjustment would exceed the 1.5 per cent Housing Levy deduction.
So we are saying, you are not going to pay Ksh2000 from your salary, so the Ksh750 that you pay, I have returned to you Ksh2000. So the difference is Ksh1250.
President William Ruto, addressing teachers in Mombasa.
President Updates Progress on Housing Contracts and Maize Production
The administration announced the PAYE proposal during the Mashujaa Day celebrations at Kipchoge Keino Stadium in Eldoret on Tuesday, October 20, 2026.
The President also provided an update on the government’s wider economic agenda. He disclosed that contracts for houses, markets, and student hostels have reached Sh1.2 trillion, with accommodation facilities for more than 180,000 learners currently under construction.
According to the President, approximately 1.1 million people are working under the housing initiative. The President said maize production doubled from 34.3 million bags in 2022 to 71 million bags last year, and the price of subsidized fertilizer decreased from Sh7,500 to Sh2,000 per bag.
“For workers on average wages, every shilling saved means more money to meet their families' needs, including food, transport and other essentials,” the President said.
Other government measures discussed by the President include:
- National Youth Opportunities Towards Advancement (NYOTA) programme: More than 120,000 young entrepreneurs have received capital and mentorship through the programme.
- Teacher Welfare: A Sh4.9 billion allocation will transition 20,000 contract teachers to permanent and pensionable terms by January 2027.
- Hustler Fund: The President announced an additional Sh5 billion for the fund before the end of 2026, noting that it has already disbursed Sh98 billion in collateral-free loans.
- Social Health Authority: Membership within the scheme has climbed to 33.3 million Kenyans, marking a significant rise from the 7 million registered under the previous National Hospital Insurance Fund in 2022.
According to the Treasury’s proposals, the official tax-free threshold is set at Sh32,333, with the standard Sh2,400 personal relief set to be abolished as the first Sh32,333 of earnings becomes subject to zero per cent PAYE. These changes require parliamentary approval before implementation.
Legislative Status
The PAYE proposal is currently before Parliament for consideration. The President has committed to further detailing his economic roadmap, which involves boosting agricultural output, increasing manufacturing output, and speeding up the shift toward a contemporary, competitive services-based economy.
Earlier coverage: Rigathi Gachagua Demands Talks for Mt Kenya Support in 2027 Election
