The Kenya Revenue Authority (KRA) has announced new changes to the computation of Pay-As-You-Earn (PAYE), effective from December 27, 2024, as outlined in the Tax Laws (Amendment) Act, 2024.

In a public notice, KRA detailed the deductions, exemptions, and tax reliefs that will apply for December 2024 and subsequent periods.

According to KRA, the changes will allow deductions from taxable employment income, including contributions to the Affordable Housing Levy as stipulated in the Affordable Housing Act, of 2024.

Deductions for contributions to a post-retirement medical fund will be capped at Sh15,000 per month, while contributions made to the Social Health Insurance Fund (SHIF) will also be deductible.

KRA stated, “Mortgage interest, not exceeding Sh360,000 per year (Sh30,000 per month), upon money borrowed by a person from one of the first six financial institutions specified in the Fourth Schedule to the Income Tax Act, to purchase or improve premises occupied by the person for residential purposes,” will also qualify as a deduction.

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Contributions to registered pension or provident funds are deductible up to Sh360,000 annually (Sh30,000 monthly).

At the same time, the notice highlighted that certain tax reliefs, including the Affordable Housing Relief and Post-Retirement Medical Fund Relief, would no longer apply.

KRA further clarified that specific gains and benefits from employment would be excluded from taxation.

For example, “The value of a benefit, advantage, or facility granted in respect of employment, where the aggregate value is less than Sh60,000 per year (Sh5,000 per month),” will not be taxable.

Meals provided by an employer up to Sh60,000 annually and gratuities not exceeding Sh360,000 per year, paid into a registered retirement pension scheme, will also be exempt.

The authority underscored its commitment to supporting taxpayers, noting, “KRA is committed to ensuring support to all persons in their tax compliance journey.”

Taxpayers seeking further information have been directed to contact KRA