New Govt Plan to Reduce PAYE, TSC Announces Mass Recruitment of Graduate Teachers

Hello and welcome to the Money Weekly Newsletter, where we cover the plan by the government to reduce PAYE in the Finance Bill 2026.

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Employed Kenyans could soon take home more pay if the government goes ahead with its plan to revise the PAYE bands.

According to the National Assembly’s Finance Committee chair, Kuria Kimani, the review will be proposed in the Finance Bill 2026. As part of the changes, the government will be proposing to increase the tax-free income from the current Ksh24,000.

Currently, Kenyans pay a 10% tax on the first taxable income of Ksh24,000. The Kenya Revenue Authority (KRA) then applies a personal relief of Ksh2,400. With this relief, no one pays tax for the first Ksh24,000.

Those who earn more are then taxed at different rates. For instance, on the next Ksh8,333 (after the first Ksh24,000 has been deducted), the tax rate is 25%. Meanwhile, those who earn above Ksh800,000 face an income tax rate of 35%.

“I think you can expect the new PAYE to reflect the new realities, for instance, the tax-free threshold of Ksh24,000 is low and can be increased so we can have a larger bracket of beneficiaries,” the committee chair revealed.

Initially, the reduction of PAYE was to be effected in the Finance Bill of 2025. However, the plan by Treasury CS John Mbadi was shelved after KRA failed to meet its revenue targets.

In June, the CS explained that he was keen on having Kenyans take home more, given the recent statutory deductions introduced, such as the Housing Levy and the Social Health Authority (SHA) contributions.

"When we were preparing the Finance Bill, we also did some simulation on how to reduce PAYE, but what stopped us from implementing it with this Finance Bill alongside the Corporate Tax was the failure by KRA to meet its revenue targets," Mbadi explained in June.

"We thought that as we carry out reforms at KRA, we should not be doing many things at the same time. First, let us see what the reforms at KRA are doing for us in terms of automation, then we can move to the next step."

Here is a quick recap of the top money news for the week:

TSC Announces 45K Jobs for Teachers and Graduates  

• On Tuesday, the Teachers Service Commission (TSC) announced 21,313 vacant positions targeting teachers seeking career progression to positions of principals, deputy principals, senior teachers, and curriculum support officers.

• Additionally, TSC announced 24,000 internship positions for graduates who will be posted in Junior Secondary Schools. The internship will last 12 months, with successful candidates getting a monthly stipend of Ksh20,000. Read more on how to apply for the TSC jobs.

Catch Up on More News

WEEKLY MONEY TIPS

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Top 10 Banks With the Highest Interest on Savings - CBK

The CBK has released the average interest rates offered by major commercial banks in June 2025. In the report, the bank with the highest average return on deposits had 13.18%, which is above the lowest rate recorded on bank loans at 10.6%.

The interest offered by banks has been on the decline in recent months as the CBK has moved to lower lending rates, a common destination for bank deposits. The trend is not common to deposits, as Money Market Funds have recently recorded lower interest rates, some now offering returns that are way below the average interest rates on deposits among leading commercial banks.

@money254hq

𝐓𝐨𝐩 𝟏𝟎 𝐁𝐚𝐧𝐤𝐬 𝐖𝐢𝐭𝐡 𝐭𝐡𝐞 𝐇𝐢𝐠𝐡𝐞𝐬𝐭 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐨𝐧 𝐒𝐚𝐯𝐢𝐧𝐠𝐬 - 𝐂𝐁𝐊 The CBK has released the average interest rates offered by major commercial banks ... See more

That’s a wrap for this week’s Money Weekly!

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