The Kenya Revenue Authority (KRA) collects different types of income taxes to fund government services like roads, hospitals, and schools. This easy-to-understand guide explains the three main types of income tax in Kenya: PAYE, Installment Tax, and Advance Tax.
1. PAYE (Pay As You Earn) – Tax for Employees
What is PAYE?
PAYE is the tax deducted from your salary every month. Your employer calculates and sends this tax directly to KRA before paying you.
Current PAYE Tax Rates (2025)
Here’s how much tax you’ll pay based on your monthly salary:
| Monthly Salary Range | Tax Rate |
|---|---|
| Up to KSh 24,000 | 10% |
| KSh 24,001 – 32,333 | 25% |
| KSh 32,334 – 500,000 | 30% |
| KSh 500,001 – 800,000 | 32.5% |
| Above KSh 800,000 | 35% |
Good to know: You get a personal relief of KSh 2,400 every month, which reduces your taxable amount.
Example Calculation
If you earn KSh 50,000 per month:
- First KSh 24,000: 10% = KSh 2,400
- Next KSh 8,333 (up to 32,333): 25% = KSh 2,083
- Remaining KSh 17,667 (50,000-32,333): 30% = KSh 5,300
- Total tax before relief: KSh 9,783
- Minus personal relief (KSh 2,400): Final tax = KSh 7,383
Important PAYE Rules
- Employers must deduct and pay KRA by the 9th of the next month
- You can check your PAYE payments through your iTax account
- Annual tax returns must be filed by 30th June each year
2. Installment Tax – For Businesses & Self-Employed
Who Pays Installment Tax?
If you expect to owe more than KSh 40,000 in taxes for the year, you must pay in installments. This applies to:
- Business owners
- Self-employed professionals
- Farmers with significant income
How to Calculate Your Payments
You can choose two methods:
- 110% of last year’s tax (if your business is stable)
- Estimate this year’s tax (if your income changed)
You pay the lower amount of these two options.
2025 Payment Due Dates
Pay in 4 equal installments on:
- 20th April
- 20th June
- 20th September
- 20th December
Farmers get special dates:
- 75% by 20th September
- 25% by 20th December
How to Pay
- Log in to iTax
- Generate a payment slip
- Pay at any approved bank or via M-Pesa
Remember: These are advance payments. You’ll still need to file an annual return to calculate your final tax bill.
3. Advance Tax – For Vehicle Owners
Who Pays Advance Tax?
Owners of:
- Matatus
- Buses
- Trucks
- Taxis
- Other commercial vehicles
2025 Rates
| Vehicle Type | Tax Amount |
|---|---|
| Vans, Trucks, Lorries | KSh 2,500 per ton or KSh 5,000/year (whichever is higher) |
| Matatus, Buses, Taxis | KSh 100 per seat/month or KSh 5,000/year (whichever is higher) |
Example: A 14-seater matatu pays:
- KSh 100 × 14 seats × 12 months = KSh 16,800 per year
- Since this is more than KSh 5,000, they pay KSh 16,800
Payment Rules
- Pay before 20th January each year
- Required before licensing your vehicle
- Paid through iTax or at KRA offices
Avoiding Common Tax Mistakes
- Late PAYE Payments – Employers face 5% penalty plus interest
- Underpaying Installments – May lead to fines when filing annual returns
- Skipping Advance Tax – Your vehicle won’t get licensed
Need Help With Your Taxes?
KRA offers several support options:
- iTax Help Desk: Call 020 4 999 999
- Local KRA Offices: Visit for face-to-face help
- Online Guides: Available on www.kra.go.ke
Final Thoughts
Understanding these three taxes helps you:
✔ Avoid penalties
✔ Budget better
✔ Stay compliant with KRA
Whether you’re an employee, business owner, or matatu operator, knowing these rules makes tax time much easier. Bookmark this guide or share it with friends who might need it!
Pro Tip: Set calendar reminders for tax deadlines so you never miss a payment!
