How Your Net Pay Is Calculated in Kenya: PAYE, SHIF, NSSF & Housing Levy (2026)
How your net pay is calculated in Kenya: PAYE, SHIF, NSSF and the Housing Levy (2026)
Your gross salary is not your salary. Between the figure in your offer letter and the money that reaches your account sit four deductions — PAYE, NSSF, SHIF and the Affordable Housing Levy — and most Kenyans have never seen them laid out in order. This guide does exactly that, with a worked example you can follow line by line, so you know where every shilling goes. To run your own number, use our free Kenya PAYE & net-pay calculator.
The four deductions, in the order they happen
The order matters, because three of the four are taken out before your tax is worked out — which lowers the tax. Here is the sequence for a private-sector employee:
- NSSF (National Social Security Fund) — your pension contribution.
- SHIF (Social Health Insurance Fund) — your health contribution, which replaced NHIF.
- Affordable Housing Levy (AHL) — the 1.5% housing contribution.
- PAYE (Pay As You Earn) — income tax, worked out on what's left after the three deductions above.
1. NSSF — your pension contribution
From February 2026 (Year 4 of the NSSF Act, 2013), NSSF is 6% of your pensionable pay, split across two tiers, up to an upper earnings limit of KES 108,000 a month. In practice that means:
- If you earn KES 108,000 or less, NSSF is 6% of your gross.
- If you earn more, NSSF is capped at KES 6,480 a month (6% of 108,000).
Your employer matches your contribution — that match is theirs, not a deduction from you.
2. SHIF — your health contribution
SHIF replaced the old NHIF in October 2024. It is 2.75% of your gross pay, with no upper cap — so unlike NSSF, it keeps rising with your salary. A very low earner pays a minimum of KES 300; for anyone on a normal salary it is simply 2.75% of gross.
3. The Affordable Housing Levy — 1.5%
The AHL is 1.5% of your gross pay, matched by your employer. It funds the government's affordable-housing programme.
The point that trips people up: since the Tax Laws (Amendment) Act, 2024 (effective December 2024), all three of these — NSSF, SHIF and the Housing Levy — are deducted from your income before PAYE is calculated. They reduce your taxable pay, which reduces your tax. (You may still see older articles say the Housing Levy isn't deductible — that describes the repealed 15% "affordable housing relief", not the levy itself.)
4. PAYE — the income tax
Whatever is left after NSSF, SHIF and AHL is your taxable pay, and PAYE is charged on it using progressive monthly bands. Kenya has no tax-free band — the first shilling is taxed at 10% — but a flat personal relief of KES 2,400 a month is then subtracted from the tax, which cancels out the tax on roughly the first KES 24,000.
| Monthly taxable pay | Tax rate |
|---|---|
| First KES 24,000 | 10% |
| KES 24,001 – 32,333 | 25% |
| KES 32,334 – 500,000 | 30% |
| KES 500,001 – 800,000 | 32.5% |
| Above KES 800,000 | 35% |
Each band only taxes the slice of income inside it — a common myth is that crossing into a higher band taxes your whole salary at the higher rate. It doesn't. Only the shillings above the threshold pay the higher rate.
A worked example: KES 100,000 gross
Follow it line by line:
| Step | Amount (KES) |
|---|---|
| Gross salary | 100,000 |
| Less NSSF (6% of 100,000) | −6,000 |
| Less SHIF (2.75% of 100,000) | −2,750 |
| Less Housing Levy (1.5% of 100,000) | −1,500 |
| Taxable pay | 89,750 |
| PAYE on the bands (before relief) | 21,708 |
| Less personal relief | −2,400 |
| PAYE payable | 19,308 |
| Net (take-home) pay | 70,442 |
So on a KES 100,000 salary, about KES 70,442 reaches your account, and roughly KES 29,558 goes to the four statutory deductions. Change the gross and the split changes — try your own figure in the net-pay calculator.
What this guide does not include
To keep the core calculation clear, the example above leaves out a few optional items that can lower your tax further if they apply to you:
- Registered pension contributions beyond NSSF are deductible, up to KES 30,000 a month (KES 360,000 a year).
- Insurance relief — 15% of life, health or education premiums, up to KES 5,000 a month.
- Mortgage interest on an owner-occupied home is deductible, within the set limit.
If any of these apply, your take-home is a little higher than the plain example.
Frequently asked questions
Is my whole salary taxed at 30% once I earn more? No. Only the portion of your taxable pay that falls inside each band is taxed at that band's rate. The 30% only applies to what you earn above KES 32,333 a month.
Why is SHIF higher than my old NHIF? NHIF was a fixed graduated amount that capped out; SHIF is 2.75% of gross with no ceiling, so higher earners now pay more toward health than before.
Does the Housing Levy really lower my tax? Yes — since December 2024 the levy is deducted before PAYE is worked out, so it reduces your taxable income. It is still money out of your pocket, but it isn't taxed on top.
How do I check the official rates? PAYE bands, personal relief and the statutory rates are published by the Kenya Revenue Authority (KRA). Rates change with each Finance Act, so confirm the current figures before relying on an old payslip. Our net-pay calculator is kept up to date.
Where does the rest of my money work hardest? Once you know your take-home, the next question is where to keep it. Compare savings accounts and money market funds, and if you're borrowing, always compare the total cost on licensed personal loans.