Every employer in Kenya is legally mandated to deduct and remit certain statutory contributions from their employees’ salaries. These deductions ensure compliance with national laws and help fund essential social programs including health, retirement benefits, affordable housing, and education loan repayments.
This guide provides a clear overview of the key statutory deductions in Kenya, updated as of 2025, and includes the recent transition from NHIF to the Social Health Insurance Fund (SHIF) under the Social Health Authority (SHA).
1. Pay As You Earn (PAYE)
Administered by: Kenya Revenue Authority (KRA)
Purpose: Income tax deducted directly from employees' monthly salaries based on their income bracket.
PAYE Tax Bands (2024/2025)
| Monthly Income (KES) | Tax Rate |
|---|---|
| 0 – 24,000 | 10% |
| 24,001 – 32,333 | 25% |
| Over 32,333 | 30% |
Relief: KES 2,400 monthly personal relief.
Due Date: 9th of the following month.
2. National Social Security Fund (NSSF)
Administered by: NSSF
Purpose: Provides retirement benefits to employees.
Contribution Structure (as per NSSF Act No. 45 of 2013)
| Tier | Employee (6%) | Employer (6%) | Total |
|---|---|---|---|
| Tier I (up to 6,000 KES) | 360 KES | 360 KES | 720 KES |
| Tier II (6,001 – 18,000 KES) | Up to 720 KES | Up to 720 KES | Up to 1,440 KES |
Maximum Total Contribution: KES 2,160/month.
Due Date: 9th of the following month.
3. Social Health Insurance Fund (SHIF)
Administered by: Social Health Authority (SHA)
Purpose: To provide universal healthcare coverage under the new health reform law.
SHIF Highlights:
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SHIF replaces NHIF under the Social Health Insurance Act, 2023.
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Contributions are now calculated as 2.75% of an employee’s gross salary.
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There is no upper limit, meaning high earners contribute more.
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Both public and private sector employees are required to contribute.
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Employers are required to deduct and remit SHIF contributions for their staff.
Note: Registration on SHA's digital platform is mandatory. Dependents can be covered under a single SHIF registration.
Due Date: On or before the 9th of the following month.
4. Housing Levy
Administered by: KRA (under the Affordable Housing Programme)
Purpose: Supports the government's housing development agenda.
Contribution Rates:
| Contributor | Rate |
|---|---|
| Employee | 1.5% of gross salary |
| Employer | 1.5% of gross salary |
| Total | 3% of gross salary |
Due Date: 9th of the following month.
5. Higher Education Loans Board (HELB)
Administered by: HELB
Purpose: Loan repayment for employees who benefited from student loans.
Key Points:
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Monthly repayments start at a minimum of KES 1,500, increasing with income level and loan balance.
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Employers are required to confirm if a new employee has an outstanding HELB loan.
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Deductions continue until the loan is fully repaid.
Due Date: 9th of the following month.
Summary Table of Statutory Deductions
| Deduction | Employee Share | Employer Share | Remittance Deadline |
|---|---|---|---|
| PAYE | Based on income | N/A | 9th monthly |
| NSSF | 6% of income (capped) | 6% of income (capped) | 9th monthly |
| SHIF | 2.75% of gross pay | N/A | 9th monthly |
| Housing Levy | 1.5% of gross pay | 1.5% of gross pay | 9th monthly |
| HELB | Varies | N/A | 9th monthly |
Why It Matters
Complying with statutory deductions is not only a legal obligation but a crucial aspect of responsible employment. Employers who fail to comply face fines, penalties, or even prosecution. Employees benefit through retirement savings, healthcare access, affordable housing, and student loan servicing.
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