KRA's Holiday Gift to Workers

In a move set to bring relief to Kenyan workers, the Kenya Revenue Authority (KRA) has announced significant tax changes that will boost take-home pay starting this December. The changes primarily affect how Housing Levy and Social Health Insurance Fund (SHIF) deductions are treated for tax purposes.

Under the new guidelines, both Housing Levy and SHIF contributions will now be considered tax-deductible expenses. This means these deductions will be subtracted from an employee's gross salary before calculating Pay As You Earn (PAYE) tax, effectively reducing the taxable income and resulting in higher net pay.

In a particularly welcome development for workers, KRA has confirmed that the tax relief will be applied retroactively to July 2023, when the Housing Levy was first implemented. The tax authority is expected to release detailed guidelines to employers on implementing these changes in December payslips.

The Central Organization of Trade Unions (COTU) Secretary General Francis Atwoli has expressed support for these measures, noting their potential to ease the financial burden on workers who have been grappling with rising living costs. The changes are seen as a significant step in balancing the implementation of new government initiatives with workers' financial well-being.

For employees, these adjustments mean more money in their pockets just as the holiday season approaches. While the exact increase in take-home pay will vary depending on individual salaries, the changes represent a meaningful effort to provide relief to Kenya's workforce during challenging economic times.