Income Tax Brackets 2023 – New Post Covid

Income Tax Brackets 2023 – THE RETURN OF PRE-COVID TAXES

Income Tax Brackets 2023 – The return of Pre-Covid Taxes: The cabinet secretary for The national treasury and planning Ukur Yatani stated that the pre-covid taxes shall be back effective January 2021 in a press statement shared on the 4th of December 2020. The changes are to enable the implementation of the government budget . He noted that these are not new tax rates but rather the reinstatement of the prevailing tax rates that had been reviewed to cushion Kenyans from the effects of the Covid-19 pandemic. This was part of the presidential directives issued in April 2020.

He stated that the government will have foregone tax revenue totaling to KES 65 billion as at the end of December 2020. This has affected the implementation of the government’s priority programs under the big 4 agenda and the recovery of the economy in general.

On the bright side, the government will continue to cushion the low income earners by retaining 100% tax exemption/ relief for those earning monthly income of KES 24,000 and Below. Alongside these measures , the government will continue to roll out interventions under the KES 58.1 Billion economic stimulus programme (ESP), such as kazi mtaani and others to cushion vulnerable citizens and also enhance the liquidity of business.

The reinstated taxes shall be as follows:
Corporate tax from 25% back to 30%
PAYE from 25% back to 30%
VAT from 14% back to 16%

You can check out the KRA information Centre for more

How is PAYE Calculated?

PAYE is computed as shown below:

Individual Tax Bands and Rates – Income Tax Brackets 2023

The following tax rates shall apply to individual employment income with effect from 1st January 2021. The first return under the new rate shall be due by the 9th Feb 2021.

Tax Bands	Annual	Monthly	Rates
On the first	Shs. 288,000	Shs. 24,000	10%
On the next	Shs.100,000	Shs. 8,333	25%
On all income in excess of	Shs. 388,000	Shs. 32,332	30%
Personal relief of Kshs. 28,800 per annum (Kshs. 2,400 per month)

PAYE is chargeable to persons of employment income of Kshs. 24,000 and above per month. 

Non Cash Benefits Chargeable to Tax – Income Tax Brackets 2023

Gains or profits from employment that are not paid in cash are chargeable to tax. Such gains or benefits include:

• Where an employee is provided with a motor vehicle by his employer i.e. car benefit
• Provision of housing by the employer
• Loans at interest rates that are lower than the prevailing market rate
• Household utilities – including telephone, electricity, water, security, domestic expenses in excess of the allowable limit of Kshs 3,000 per month.
• Pension contribution paid by a tax exempt employer to an unregistered scheme.
• Pension contribution paid by an employer to a registered or unregistered scheme in excess of the allowable amount of Kshs 20,000 or Kshs 240,00 per year.