Few topics confuse Kenyan employers more than statutory deductions. Rates change, the law changes, and the regulators have not always communicated changes consistently. This guide takes the five major statutory contributions an employer is responsible for and explains how each one works in 2026, with worked examples.
Disclaimer: Statutory rates change. Always confirm the current figures on the KRA, NSSF, and SHA portals before running payroll. This article is informational, not tax advice.
1. PAYE (Pay As You Earn)
PAYE is the income tax that employers withhold from employees' gross pay each month and remit to KRA by the 9th of the following month. Kenya runs a banded system. As of 2026 the bands are roughly:
- 10% up to KES 24,000
- 25% on the next 8,333
- 30% on the next 467,667
- 32.5% on the next 300,000
- 35% above 800,000
Personal relief of KES 2,400/month and insurance/mortgage reliefs apply.
Worked example. An employee earns KES 200,000 gross. Taxable pay is gross minus allowable deductions (NSSF, mortgage interest, etc.). PAYE on a KES 200,000 gross is approximately KES 47,000 before reliefs.
2. NSSF (National Social Security Fund)
The NSSF Act 2013 introduced tiered contributions:
- Tier I — on pensionable earnings up to the lower limit (currently KES 8,000): 6% employee + 6% employer.
- Tier II — on earnings between the lower and upper limits (currently KES 8,001 – 72,000): 6% employee + 6% employer, unless the employer operates a contracted-out occupational scheme.
Total maximum NSSF contribution per employee per month is currently around KES 4,320 each side.
3. NHIF / SHA (Social Health Authority)
Kenya is transitioning from NHIF to the Social Health Authority framework under the Social Health Insurance Act. The headline change: contributions are now 2.75% of gross monthly pay, with a minimum of KES 300, replacing the old banded NHIF table. Confirm the current rate on the SHA portal before payroll.
4. Housing Levy
Introduced under the Affordable Housing Act 2024:
- 1.5% of gross monthly pay, deducted from the employee.
- 1.5% matched by the employer.
- Remitted to KRA together with PAYE by the 9th of the following month.
5. NITA (Industrial Training Levy)
A flat KES 50 per employee per month, payable annually by the 10th of the month after each anniversary of the employer's registration.
Other deductions to be aware of
- HELB — for employees servicing a Higher Education Loans Board loan, the employer must facilitate deductions.
- SACCO contributions — voluntary but common.
- Pension scheme contributions — for employers running an occupational scheme.
Worked example: a KES 200,000/month employee
| Item | Employee | Employer |
|---|---|---|
| Gross | 200,000 | — |
| NSSF | 4,320 | 4,320 |
| SHA (2.75%) | 5,500 | — |
| Housing Levy (1.5%) | 3,000 | 3,000 |
| NITA | — | 50 |
| PAYE (after reliefs, approx) | 44,500 | — |
| Net pay (approx) | 142,680 | — |
Common payroll mistakes
- Late remittance. All major contributions are due by the 9th of the following month. Penalties stack quickly.
- Forgetting the employer match. NSSF, Housing Levy, and (where applicable) pension are dual-side.
- Not reconciling P9 forms annually. Every employee is entitled to a P9 by 28 February for the prior year.
- Missing the SHA transition. Employers still operating on legacy NHIF tables risk under-deducting.
Key takeaways
- PAYE, NSSF, SHA, Housing Levy, and NITA are non-negotiable for every employer.
- Confirm rates monthly — the regulatory environment is moving fast.
- Automate payroll through an accredited provider; the cost is far lower than the penalty exposure.
For a full hiring overview, see our Complete Guide to Hiring in Kenya.