KRA Tax Calculator 2021: See The New KRA PAYE Tax Rates 2021 Here

The Kenya Revenue Authority, the official taxing institution in Kenya, ordinarily makes amendments to PAYE rates at par with the prevailing economic situation. The institution has revised rates in its five PAYE tax bands charged on people’s income. Before you utilize any KRA tax calculator, it is good to know how your company’s accountant arrives at these figures submitted to KRA.

You are likely interested in knowing what your tax obligation might be. Many Kenyans don’t know how their PAYE is calculated, and sometimes, there might be incredible misinformation in the public about the rates.

It would be best if you kept in mind that the Kenya income brackets, as specified by the revenue collector, pay different tax rates. And if you earn more than the lowest band, your proportion of that amount is charged the same. Get the idea?

KRA PAYE Tax Calculator

Pay as You Earn (PAYE) refers to tax deductions from wages and salaries from employment. PAYE in Kenya applies to bonuses, salaries, commissions, wages, directors’ fees, or any other income from work.

PAYE also incorporates housing value as long as it is employer-provided. However, the deductions do not apply to someone engaging in casual employment (employed for less than a month).

Kenya Income Tax Brackets

There are five tax bands, or what is also referred to as tax brackets. The taxable income increases by 11,586 (monthly income) except for the last group, where the tax rate rises by 5% from one tax band to the other.

The minimum taxable income comes from the lowest earners (Ksh.12,298 and below) who pay a tax rate of 10%, while the highest band (from Ksh.47,059 and above) gives 30%. The following are the applicable monthly tax brackets and PAYE rates in Kenya:

• Up to Ksh12,299: 10%
• Ksh.12,299 – Ksh.23,885: 15%
• Ksh.23,886 – Ksh.35,472: 20%
• Ksh.35,473 – Ksh47,059: 25%
• Above Ksh.47,059: 30%

The KRA personal relief for every employee every month is Ksh.2,400 that translates to Ksh.28,800 per year.

What Income Is Taxable?

Before delving into the details of the new income tax rates in Kenya, it would be a great idea to know how KRA arrives at the taxable income amount. Most employers offer a basic salary plus allowances such as per diem, housing, medical, transport, and school fees allowance.

Gross taxable income is the sum of basic pay plus allowances and any taxable benefits. Taxable benefits include but are not limited to assets owned, hired, or leased by the employer, payment of vehicle loans, or house rent by your employer.

Gross taxable income = Basic pay + Taxable benefits + Allowances

The gross taxable income plays a huge role in the math done using the Kenya income tax calculator to compute your taxable income. The difference between the gross taxable income and allowable deductions will give you the total taxable income.

Net taxable income = Gross taxable income – Deductions

KRA Allowable Tax Deductions

The income tax law in Kenya has provisions for certain allowable deductions for employees. This means that these amounts are not included in your taxable amount and are deducted before putting it into the KRA tax calculator.

Retirement Contributions

You may have probably heard of National Security Social Fund (NSSF) or, as many call it, malipo ya uzeeni. The monthly NSSF contributions range from KES 360 to KES 1080 per month. Apart from NSSF, private contributions to pension schemes qualify for tax deductions of the least of 30% of pensionable income or Ksh.20,000 or 30% of pensionable pay.

If you earn a salary of Ksh. 20,000 and NSSF is the only deduction; your taxable income would be Ksh.18,920 (Ksh.20,000 – Ksh.1,080).

Owner-occupied Interest

Another deduction to consider when using the Kenyan tax calculator is mortgage relief. As of 2017, KRA increased the mortgage relief to Ksh.300,000 per annum (Ksh.25,000 monthly) from Ksh.150,000 a year on loan interest.

Remember, the mortgage relief is only applicable if the property is residential (you live there). If you have a loan from National Housing Corporation, Housing Finance, or any other approved bank, you can claim deductions as long as you prove the loan fulfilled the intended purpose.

Homeownership Savings Plan

The KRA tax calculator PAYE also factors in deposits on home savings plans. Suppose you are making contributions towards owning your home under a registered home savings plan. In that case, you qualify for a deduction of up to four thousand Kenyan shillings a month, provided the terms and conditions apply. However, the deductions are for a maximum of nine consecutive years.

Tax Relief

Kenyans are allowed to deduct from their tax burden two tax reliefs (personal relief and insurance relief) under PAYE.

1. Personal Relief

Every Kenyan is entitled to tax relief of Ksh.2,400 per month or Ksh.28,800 every year. These figures became active from April 25, 2020.

2. Insurance Relief

All taxpayer residents are eligible for insurance relief in Kenya. By law, the insurance relief is equivalent to 15% of premiums paid but for a maximum of Ksh.500 per month. The insurance should be for life, education or health. Also, the insurance relief shouldn’t exceed Ksh.60,000 per month.

How To Use KRA Online Tax Calculator In Kenya

Now that you know the theoretical elements of tax payable on taxable salary, how about a mathematical view of the same. The best way of doing this is by utilizing the KRA PAYE calculator that you can access online.

Suppose your gross pay is Ksh.30,000 per month and that you make contributions to NSSF (new rate of Ksh.1,080) and NHIF (Ksh.750) only; your net salary will be something similar to the image below.

1. Make Allowable Deductions To Get The Taxable Pay

Taxable pay = gross pay – deduction, i.e.

Ksh.30,000 – Ksh.1,080 = Ksh.28,920

2. Refer To KRA PAYE Tax Rates To Know Your Income Tax Bracket

Ksh.28,920 falls in the third band of the new income tax rates in Kenya. Therefore, the tax rate is:

For the first Ksh.12,298 = Ksh.12,298*10% = Ksh.1,229.8 ≈Ksh.1,230

The remaining amount is Ksh.28,920 – Ksh.12,298 = Ksh.16,622

You will now use the second band and that will be (Ksh.23,885 – Ksh.12,299) *15% = Ksh.1,737

The remaining amount is Ksh.16,622 – Ksh.11,586 = Ksh.5,036 that will use the third band, i.e.

Ksh.5,036*20% = Ksh.1,007

Therefore, the total tax applicable is Ksh.1,230 + Ksh.1,737 + Ksh.1,007 = Ksh.3,974

Now subtract tax relief Ksh.3,974 – Ksh.2,400 = Ksh.1,574

PAYE, in this case, is Ksh.1,574

PAYE Calculator Download

You can also find KRA PAYE tax calculators from the Google App Store, including the iTax service app by KRA, where you can continually update and have the most recent version. The PAYE calculator will make you aware of the amount of money you’ll remain with once the tax and all the reliefs have been deducted.

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