“It’s not about what you earn—it’s about what lands in your account.”
If you’ve ever stared at your payslip wondering why your take-home pay feels far from your gross salary, you're not alone. For many employees—and even some employers in Kenya—navigating deductions like PAYE, NSSF, and SHIF can feel like walking through a financial maze.
But in 2025, understanding how to calculate gross to net salary isn’t just important—it’s essential. Whether you’re an employee trying to make sense of your pay, or an employer seeking compliance, this guide will walk you through the correct calculations using Kenya’s updated 2025 statutory rates.
What’s the Difference Between Gross and Net Salary?
Before we dive in, let’s clarify the basics:
-
Gross Salary is your total pay before deductions. It includes basic pay, house allowance, commissions, bonuses, and other benefits.
-
Net Salary is what you actually receive in your bank account after statutory and voluntary deductions.
Step-by-Step: Gross to Net Salary Calculation (Using 2025 Rates)
Let’s break it down with an example. Suppose an employee has a gross monthly salary of KES 100,000. Here’s how to arrive at the net salary:
1. NSSF Deduction (2025 – Tier I & II)
Under the new NSSF Act, contributions are split into two tiers:
-
Tier I (first KES 7,000): 6% = KES 420
-
Tier II (next KES 36,000): 6% = KES 2,160
Total NSSF Deduction = KES 2,580
This is a mandatory deduction for all employees and must be remitted monthly.
2. SHIF Deduction (2025 – Replaces NHIF)
Starting in 2024 and fully implemented in 2025, NHIF has transitioned into SHIF (Social Health Insurance Fund) under Kenya’s Universal Health Coverage (UHC) framework.
-
SHIF is charged at 2.75% of gross salary
So, for a gross salary of KES 100,000:
SHIF = 2.75% × 100,000 = KES 2,750
This deduction is now managed by the Kenya Revenue Authority (KRA), and replaces the previous tiered NHIF bands.
3. PAYE (Pay As You Earn) – 2025 Tax Bands
After deducting NSSF from gross, the taxable salary becomes:
KES 100,000 – 2,580 = KES 97,420
Now apply the 2025 PAYE bands:
| Tax Band | Monthly Income (KES) | Rate |
|---|---|---|
| Band 1 | 0 – 24,000 | 10% |
| Band 2 | 24,001 – 32,333 | 25% |
| Band 3 | 32,334 – 500,000 | 30% |
| Band 4 | 500,001 – 800,000 | 32.5% |
| Band 5 | 800,001+ | 35% |
PAYE Calculation:
-
First 24,000 @ 10% = KES 2,400
-
Next 8,333 @ 25% = KES 2,083.25
-
Remaining 65,087 @ 30% = KES 19,526.10
Total PAYE = KES 24,009.35
Less Personal Relief (KES 2,400/month)
Net PAYE = KES 21,609.35
4. Other Deductions (Optional)
These vary by employee and include:
-
HELB loan repayments
-
Pension contributions (above NSSF)
-
Sacco or microloan deductions
For this example, we’ll assume none.
Final Net Salary Summary
| Description | Amount (KES) |
|---|---|
| Gross Salary | 100,000 |
| NSSF | -2,580 |
| SHIF | -2,750 |
| PAYE (after relief) | -21,609.35 |
| Net Salary | 73,060.65 |
So, from a gross of KES 100,000, the employee takes home KES 73,060.65 after statutory deductions in 2025.
Why This Matters in 2025
Understanding gross-to-net calculations helps you:
-
Stay compliant with KRA, SHIF, and NSSF
-
Avoid penalties for incorrect remittances
-
Build employee trust through transparent payslips
-
Accurately budget for payroll costs
“Payroll isn’t just math—it’s a matter of trust, compliance, and business reputation.”
Make Payroll Effortless with FaidiHR
Doing these calculations manually for multiple employees every month? That’s a sure path to errors, burnout, or worse—compliance penalties.
FaidiHR does the heavy lifting for you:
-
Automatically calculates PAYE, SHIF, and NSSF
-
Generates digital payslips in seconds
-
Tracks loans, pensions, and allowances
-
Produces ready-to-submit reports for KRA and fund remittances
-
Supports businesses, NGOs, and institutions across Kenya and East Africa
Ready to Simplify Your Payroll?
Whether you're a growing startup, a busy HR officer, or running an NGO across counties, FaidiHR ensures you stay compliant and efficient.
Call us today at +254 702 339 699
Email: sales@faidihr.com
Let’s take the stress out of payroll—so you can focus on growing your impact.