Kenya’s payroll system just got a major facelift — SHIF replaced NHIF, NSSF tiers updated, and PAYE tax bands reshuffled. But let’s be honest: most businesses are still trying to figure it all out. This blog breaks it down using relatable salary examples (KES 50,000 and KES 100,000) and smart tools like the SHIF Calculator Kenya, NSSF Calculator Kenya, and PAYE Calculator 2025. Plus, we’ll show you why now is the time to embrace Payroll Automation in Kenya.
SHIF Is Here: Bye NHIF, Hello 2.75%
The Social Health Insurance Fund (SHIF) is now in effect as of October 1, 2024. Instead of the fixed NHIF rates, SHIF takes 2.75% of your gross salary, with a minimum of KES 300 per month and no upper cap.
If math isn’t your thing, just plug your numbers into a SHIF Calculator Kenya and let it handle the rest.
NSSF Two-Tier Breakdown
Under the NSSF Act 2013, contributions are split:
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Tier I: 6% of the first KES 8,000 → KES 480 from both employer and employee
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Tier II: 6% of earnings between KES 8,001 and KES 72,000 → up to KES 3,840 each
Total possible contribution by employee: KES 4,320
A NSSF Calculator Kenya is the easiest way to stay accurate.
PAYE Calculator 2025: Know Your Bands
New tax bands are in effect, and here's how they break down:
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10% for income up to KES 24,000
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25% on the next KES 8,333
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30% up to KES 500,000
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32.5% on the next KES 300,000
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35% for anything above KES 800,000
With a PAYE Calculator 2025, you can get this sorted in seconds.
Salary Examples That Hit Home
Employee Earning KES 50,000:
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SHIF: 2.75% × 50,000 = KES 1,375
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NSSF: Tier I + Tier II = KES 4,320
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Taxable Income: 50,000 – 4,320 = KES 45,680
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PAYE ≈ KES 8,487.35
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Net Salary ≈ KES 35,817.65
Employee Earning KES 100,000:
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SHIF: 2.75% = KES 2,750
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NSSF: KES 4,320
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Taxable Income: 100,000 – 4,320 = KES 95,680
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PAYE ≈ KES 33,187.25
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Net Salary ≈ KES 59,742.75
Why Automation Matters Now
Despite SHIF, NSSF, and PAYE updates, over 48% of Kenyan SMEs still handle payroll manually — risking errors, penalties, and frustrated employees.
Tools like FaidiHR, which support automated SHIF, NSSF, and PAYE calculations, are becoming the new norm.
Ready to Simplify Your Payroll?
Whether you're a growing SME or an established company, it’s time to go digital. Automate your HR and payroll with FaidiHR and say goodbye to tax-time chaos.
Email us at sales@faidihr.com
Call us: 0702 339 699
Let’s simplify payroll, together.