Payroll in Kenya 2026: PAYE, SHIF, housing levy and NSSF

In Kenya the employer deducts PAYE, the employee's NSSF contribution, the Social Health Insurance Fund (SHIF) contribution and the Affordable Housing Levy (AHL) from each salary and pays them over by the 9th of the following month. On top of salary the employer matches the NSSF contribution and the 1.5% housing levy and pays the NITA training levy.

Kenyan payroll at a glance

NSSF, SHIF, the housing levy and NITA

NSSF. The NSSF Act (Cap. 258) is being phased in. Year 3 rates ended on 31 January 2026, and the Year 4 rates apply from February 2026: a lower earnings limit of KES 9,000 and an upper earnings limit of KES 108,000. Both employee and employer pay 6% of pay up to the upper limit, so at most KES 6,480 each and KES 12,960 in total per employee a month. Remit by the 9th of each following month.

SHIF. The Social Health Authority collects the Social Health Insurance Fund contribution: employers deduct 2.75% of gross salary, with a minimum of KES 300 a month, and are responsible for calculating and remitting it to the SHA. There is no employer share.

Affordable Housing Levy. Under the Affordable Housing Act 2024 the employee pays 1.5% of gross monthly salary and the employer pays a matching 1.5%. KRA collects the levy, and employers have deducted it since 19 March 2024. It is due by the 9th working day after the end of the month.

NITA levy. All employers register with the National Industrial Training Authority as levy payers and pay KES 50 per employee a month. It is an employer cost, not a deduction from pay, and is payable on the last working day of the month by M-Pesa or bank, never in cash.

PAYE: bands, relief and deductions

PAYE has used the same bands since 1 July 2023 under the Finance Act 2023:

Reliefs: every resident employee gets personal relief of KES 2,400 a month (KES 28,800 a year), deducted from the tax. Insurance relief is 15% of premiums paid on qualifying life, health or education policies, up to KES 60,000 a year.

Deductions before tax: SHIF contributions, the employee's Affordable Housing Levy and contributions to a registered pension or provident fund, up to KES 30,000 a month (KES 360,000 a year), are deducted from employment income before PAYE is worked out.

Minimum wages and mandatory pay

Kenya has no single national minimum wage. The Regulation of Wages (General) (Amendment) Order 2026 (Legal Notice 95 of 2026) sets new basic minimum wages by occupation and area, in operation from 1 May 2026. For a general labourer, including cleaners, gardeners, day watchmen and messengers:

These amounts exclude housing allowance, so housing or a housing allowance comes on top. Other occupations have higher rates in the same order; for example, a night watchman in the five cities earns at least KES 20,133.72. Farm workers follow the Regulation of Wages (Agricultural Industry) (Amendment) Order 2026, also from 1 May 2026, with a basic minimum consolidated wage of KES 9,196.93 a month for an unskilled employee.

Kenyan law has no statutory 13th month salary; bonuses depend on the contract or a collective agreement.

Monthly payroll calendar and filings

Before the first payroll: register the business with KRA for PAYE, with the NSSF, with the SHA and with NITA as a levy payer, and collect each employee's details for these registrations.

Every month:

If there is no PAYE to declare for a month, file a nil return. Keep each payroll's workings so that what you remit matches what you deducted from every employee.

Worked example: KES 100,000 a month in 2026

An employee earns KES 100,000 a month in Nairobi, with no other pension scheme and no insurance relief. Pay is below the NSSF upper limit, so NSSF is 6% of the full pay: KES 540 for Tier I plus 6% × (100,000 − 9,000) = KES 5,460 for Tier II.

Taxable pay is 100,000 − 6,000 − 2,750 − 1,500 = KES 89,750. Tax: 10% × 24,000 = 2,400.00, plus 25% × 8,333 = 2,083.25, plus 30% × 57,417 = 17,225.10, so KES 21,708.35 before relief and KES 19,308.35 after the personal relief of KES 2,400.

At KES 108,000 or more, NSSF stops growing: each side pays the maximum of KES 6,480.

Common mistakes

1. 1Using the Year 3 NSSF limits after February 2026, instead of KES 9,000 and KES 108,000.
2. 2Working out PAYE before deducting SHIF, the housing levy and pension, which overstates the tax.
3. 3Charging SHIF below KES 300 for low earners; the minimum is KES 300 a month.
4. 4Paying the minimum wage of the wrong area or occupation, or forgetting that the wage orders exclude housing allowance.
5. 5Missing the 9th, or treating the housing levy deadline as the 9th calendar day instead of the 9th working day.
6. 6Deducting the NITA levy from employees. It is an employer cost of KES 50 a month per employee.

For a smooth month-end, see our month-end close checklist.

How Clientlly helps

Clientlly ships a built-in payroll profile for Kenya: the monthly PAYE bands with the personal relief modelled as a tax-free band, NSSF Tier I and Tier II with the Year 4 upper earnings limit, SHIF, the Affordable Housing Levy for employee and employer, the deductibility of these contributions, and the city minimum wage for a general labourer, checked against official sources on 1 October 2026. It calculates gross to net and the employer contributions, produces payslips, supports recurring payroll adjustments, and imports employees and payroll data; an administrator can adjust the rates in the payroll tax settings. The profile models one employee in a primary job, single, without dependants, at national level, so the NITA levy, insurance relief, the minimum wage for other occupations and areas, and personal circumstances must be checked.

The Clientlly HR module also handles leave requests and approvals with a leave calendar and keeps HR documents in one place, and attendance and time tracking records hours and overtime for you to review before payroll.