In Short: Kenya Statutory Payroll Deductions (2026)
Kenya enforces four mandatory statutory payroll deductions: PAYE income tax (10% to 35%), NSSF retirement pension (6% employee + 6% employer, capped at KES 6,480 in 2026), SHIF universal health coverage (2.75% of gross, min KES 300), and the Affordable Housing Levy (1.5% employee + 1.5% employer). Employers also remit KES 50 per employee for NITA.
Managing payroll compliance in Kenya requires a thorough understanding of mandatory deductions. Whether you are an employee reviewing your take-home pay or an employer calculating total payroll liabilities, our verified PAYE calculator applies all statutory formulas in their precise legal sequence.
Statutory deductions at a glance
The table below summarizes the key legal specifications for all four mandatory statutory payroll deductions in Kenya for the 2026 tax year:
| Deduction | Standard Rate | Employee Pays | Employer Pays | Ceiling or Minimum | Reduces PAYE? | Official Source |
|---|---|---|---|---|---|---|
| PAYE Income Tax | 10% to 35% (Banded) | Full calculated tax | None | No upper limit | N/A (Is the tax) | KRA Income Tax Act |
| NSSF Pension | 12% total (split) | 6% pensionable pay | 6% match | Max KES 6,480 each (2026 UEL) | Yes (Pre-tax) | NSSF Act 2013 |
| SHIF Healthcare | 2.75% of Gross | 2.75% | None | Minimum KES 300.00 | Yes (Pre-tax) | Social Health Authority |
| Housing Levy (AHL) | 3.0% total (split) | 1.5% of Gross | 1.5% match | No upper limit | Yes (Pre-tax) | Affordable Housing Act |
The order deductions are applied
Statutory payroll deductions must be computed in a precise sequence to ensure accurate taxation. The flowchart below demonstrates how your gross earnings flow through statutory deductions to arrive at your final take-home salary:
What each deduction pays for
1. PAYE (Pay As You Earn)
PAYE is personal income tax collected by KRA from formal employees to finance the national government's recurrent and development expenditure, including infrastructure, education, and public administration. For calculation mechanics, read how PAYE is calculated.
2. NSSF (National Social Security Fund)
NSSF contributions provide basic social security pensions and retirement lump sums for Kenyan workers. Under the NSSF Act 2013, funds are invested in long-term income-generating assets to support workers upon reaching retirement age (60 years).
3. SHIF (Social Health Insurance Fund)
Managed by the Social Health Authority, SHIF finances Kenya's Universal Health Coverage (UHC) program, guaranteeing access to primary healthcare, emergency services, and chronic illness treatment at accredited facilities across the country.
4. Affordable Housing Levy (AHL)
Introduced under the Affordable Housing Act 2024, the housing levy finances the development of affordable residential housing units for low and middle-income Kenyans, creating construction employment and enabling long-term homeownership.
Deductions that are not statutory
It is important to distinguish legal statutory deductions from voluntary post-tax deductions. Items such as cooperative savings (SACCO shares and loan check-offs), Higher Education Loans Board (HELB) student repayments, and private commercial bank loans are non-statutory. They are deducted from your net salary after PAYE has already been calculated. Learn more on our reliefs and deductions guide.