PAYE Calculator

Every month, thousands of Kenyan employees stare at their payslips wondering where their money went. Here’s exactly what those deductions mean and how to calculate them.

Enter your gross salary above to see the breakdown of every deduction on your payslip.

Share this PAYE calculator with colleagues who keep asking about their payslip deductions

The Math Behind Kenyan Payslip Deductions #

Sarah graduated from university last year and landed her first job at Ksh 80,000 per month. When her first payslip arrived, she was shocked to see only Ksh 59,248 in her account. “Where did Ksh 20,752 go?” she wondered.

Like Sarah, most new employees in Kenya don’t understand payslip deductions. The government requires employers to deduct several amounts before paying salaries, and PAYE (Pay As You Earn) tax is usually the largest deduction.

Understanding these deductions helps employees budget better and avoid the monthly surprise of a smaller-than-expected bank deposit. Use our Net Pay Calculator to see your actual take-home for realistic financial planning.

What PAYE Calculator Shows: Every Payslip Deduction Explained #

When employees use a PAYE calculator, they discover several mandatory deductions that employers must make:

PAYE Deduction (Pay As You Earn Tax) #

PAYE is income tax deducted directly from salaries before payment. The Kenya Revenue Authority (KRA) sets these rates:

• First Ksh 24,000 monthly: 10% tax rate
• Next Ksh 8,333 (Ksh 24,001 to Ksh 32,333): 25% tax rate
• Next Ksh 467,667 (Ksh 32,334 to Ksh 500,000): 30% tax rate
• Next Ksh 300,000 (Ksh 500,001 to Ksh 800,000): 32.5% tax rate
• Above Ksh 800,000: 35% tax rate
• Personal relief: Ksh 2,400 reduces the final tax amount

Check current rates at KRA’s official PAYE page.

NSSF Calculator (National Social Security Fund) #

NSSF is Kenya’s retirement savings scheme that employees must contribute to:

• Tier 1: 6% on the first Ksh 8,000 of salary
• Tier 2: 6% on the next Ksh 64,000 (Ksh 8,001 to Ksh 72,000)
• Maximum monthly contribution: Ksh 4,320
• Employers match employee contributions

Verify rates at NSSF’s official rates page.

SHIF Calculator (Social Health Insurance Fund) #

SHIF replaced NHIF as Kenya’s health insurance scheme:

• Rate: 2.75% of gross salary
• Minimum contribution: Ksh 300 monthly
• Fully tax-deductible from taxable income
• Provides universal health coverage for contributors

Learn more at the Social Health Authority.

Housing Levy Calculator #

The government introduced this levy to fund affordable housing projects:

• Rate: 1.5% of gross salary (employees pay the full amount)
• Tax-deductible from taxable income
• Contributions may qualify for housing benefits in the future

Learn more at KRA’s Housing Levy guide.

How PAYE Calculator Works: Step-by-Step Deduction Process #

Understanding how employers calculate deductions helps employees verify their payslips. Here’s how a PAYE calculator processes a Ksh 100,000 salary:

Step 1: Calculate Statutory Deductions First #

• NSSF: Ksh 4,320 (6% on Ksh 72,000 maximum pensionable pay)
• SHIF: Ksh 2,750 (2.75% of Ksh 100,000)
• Housing Levy: Ksh 1,500 (1.5% of Ksh 100,000)
• Total statutory deductions: Ksh 8,570

Step 2: Calculate Taxable Income #

Taxable income = Gross salary – Statutory deductions
Taxable income = Ksh 100,000 – Ksh 8,570 = Ksh 91,430

Step 3: Apply PAYE Tax Rates #

Using the PAYE calculator Kenya formula:

• First Ksh 24,000 × 10% = Ksh 2,400
• Next Ksh 8,333 × 25% = Ksh 2,083
• Remaining Ksh 59,097 × 30% = Ksh 17,729
• Total tax before relief = Ksh 22,212
• Less personal relief = Ksh 2,400
• Final PAYE tax = Ksh 19,812

Step 4: Calculate Net Pay #

• Taxable income: Ksh 91,430
• Less PAYE tax: Ksh 19,812
• Final net pay: Ksh 71,618

The employee receives Ksh 71,618 instead of the expected Ksh 100,000, with Ksh 28,382 going to various deductions.

Why Employees Need PAYE Calculator for Financial Planning #

Smart employees use PAYE calculator tools before accepting job offers. Understanding net pay helps with:

Accurate Budget Planning #

When employees know their actual take-home pay, they can create realistic budgets:

• 50% for needs (rent, food, transport): Ksh 35,809
• 30% for wants (entertainment, shopping): Ksh 21,485
• 20% for savings and investments: Ksh 14,324

Use our Rent Affordability Calculator to ensure your housing costs don’t exceed recommended limits based on your actual net pay.

Better Salary Negotiations #

Employees who understand deductions negotiate more effectively. Someone wanting Ksh 70,000 take-home needs approximately Ksh 98,000 gross salary.

Avoiding Financial Surprises #

New employees often budget using gross salaries, leading to financial stress when the actual pay is much lower. Check our Best Money Market Funds Kenya guide to invest your savings wisely.

Common Payslip Questions PAYE Calculator Answers #

“Why is my PAYE so high?” #

PAYE increases with salary due to progressive tax rates. Higher earners pay higher percentages on portions of their income above certain thresholds.

“Can I reduce my PAYE legally?” #

Yes, through allowances like:

• Fuel allowance (up to Ksh 20,000 untaxed)
• Post-retirement medical fund contributions (up to Ksh 15,000 tax-deductible)
• Proper house allowance structuring

Consult the Institute of Certified Public Accountants of Kenya (ICPAK) for professional tax advice.

“Why did my deductions change?” #

Government policies change regularly. Recent changes include SHIF replacing NHIF and new NSSF contribution rates. Stay updated through KRA’s official website.

Using PAYE Calculator for Different Scenarios #

Employees use PAYE calculator for various situations:

• Job hunting: Comparing net salaries across different offers
• Career planning: Understanding how promotions affect take-home pay
• Financial planning: Calculating disposable income for loans or investments – see our Compound Interest Calculator to project savings growth
• Tax compliance: Verifying employer calculations are correct

Before accepting any job:

• Ask for gross salary amounts
• Use PAYE calculator to determine net pay
• Budget based on actual take-home, not gross salary
• Verify calculations against KRA’s official tax guide

Maximizing Your Net Pay: Smart Strategies #

1. Understand Tax-Deductible Benefits #

Work with your employer to structure your compensation package efficiently:

• Request fuel allowances instead of cash
• Maximize pension contributions for tax relief
• Utilize medical insurance benefits

2. Plan for Large Expenses #

Knowing your exact net pay helps plan major purchases:

• Use our Lipa Mdogo Mdogo Calculator to see if phone financing fits your budget
• Check our 1/4 Acre Land Guide to calculate affordable land down payments
• Use the Severance Pay Calculator if changing jobs to budget your transition

3. Automate Savings #

Set up automatic transfers based on your actual net pay:

• Learn How to Send Money to Equity Bank for automated savings
• Reduce transaction fees with our How to Reduce Transaction Costs guide
• Invest consistently using our Best Money Market Funds Kenya recommendations

PAYE vs Other Deductions: Understanding Priority #

The order of deductions matters:

1. First: NSSF, SHIF, Housing Levy (statutory deductions)
2. Second: Calculate taxable income
3. Third: Apply PAYE tax rates
4. Fourth: Deduct personal relief
5. Finally: Calculate net pay

This sequence ensures you get proper tax relief on statutory contributions.

Special Cases: How PAYE Calculator Handles Them #

Bonus Payments #

Bonuses are taxed at your marginal rate (the highest tax bracket your income reaches). For example:

• Regular salary: Ksh 80,000
• Annual bonus: Ksh 100,000
• The bonus pushes you into higher tax brackets temporarily

Multiple Employers #

If you work for multiple employers, each calculates PAYE independently. You may need to file a tax return to reconcile total income with the KRA iTax portal.

Commission-Based Income #

Variable income requires careful planning. Use our PAYE calculator with your average monthly income to budget conservatively.

Student Loan Considerations #

If you’re repaying education loans, factor this into your budget:

• Check our How to Apply for HELB Loan guide for repayment schedules
• HELB deductions come after PAYE and statutory deductions
• Plan your budget around both payslip deductions and loan repayments

Why Understanding Payslip Deductions Matters #

Employees who understand their payslips make better financial decisions. They know exactly how much money they’ll receive each month, enabling proper budgeting and financial planning.

Most financial stress among young professionals comes from poor salary expectations. When someone expects Ksh 80,000 but receives Ksh 59,000, they struggle to meet financial commitments.

Knowledge of deductions also helps employees identify errors on their payslips and ensures employers comply with legal requirements.

Additional Resources for Kenyan Employees #

Government Resources #

• Kenya Revenue Authority (KRA) – Official tax information and iTax portal
• National Social Security Fund (NSSF) – Pension contributions and benefits
• Social Health Authority (SHA) – Health insurance information
• Ministry of Labour – Employment rights and regulations

Financial Planning Tools #

• Central Bank of Kenya – Financial literacy resources
• Retirement Benefits Authority – Pension planning guidance
• Financial Sector Deepening Kenya – Personal finance education

Professional Support #

• Institute of Certified Public Accountants of Kenya – Tax advisory services
• Federation of Kenya Employers – Employment standards information

Take Control of Your Finances Today #

Found this PAYE calculator helpful? Share it with colleagues struggling to understand their payslips.

Bookmark this PAYE calculator page – payroll questions come up more often than expected.

Pro tip: Calculate your net pay before accepting any job offer. This ensures you can afford your lifestyle and financial commitments based on actual take-home pay, not inflated gross salary figures.

For comprehensive financial planning, explore our full range of calculators and guides to maximize every shilling you earn.