The Kenya Bankers Association (KBA) has called for a five‑percentage‑point reduction in Pay As You Earn (PAYE) tax across every income bracket, arguing that relief should be universal to restore confidence and stimulate spending.

KBA chief executive Raimond Molenje presented the proposal on 22 October during the launch of the 2025 Total Tax Contribution Report, emphasizing that a broad cut would directly increase workers’ take‑home pay.

The association estimates the uniform 5 % cut could return roughly Ksh28 billion a year to employees, potentially generating about Ksh42 billion in immediate economic output through higher consumer spending.

President William Ruto’s alternative plan targets workers earning Ksh32,333 or less per month, exempting them entirely from PAYE, a shift from an earlier Ksh30,000 threshold announced during Mashujaa Day celebrations in Eldoret.

National Treasury Cabinet Secretary John Mbadi confirmed that a formal amendment bill to enact the low‑income exemption will be tabled in Parliament in November, subject to standard legislative debate and approval.

Mbadi cautioned that the treasury may lack sufficient fiscal space to adopt a uniform 5 % PAYE cut immediately, but indicated the proposal could be reviewed in future tax reforms.

Under the current tax framework, resident employees receive a monthly personal relief of Ksh2,400, offsetting PAYE on the first Ksh24,000 of taxable income, with higher earnings taxed progressively.

KBA has been lobbying for broader tax reforms since December 2025, previously proposing to raise the minimum taxable income to Ksh30,000 and cap the top PAYE rate at 30 percent to aid households and small businesses.