Kenya Payroll Explained: PAYE, NSSF, SHIF and the Housing Levy

Running payroll in Kenya means getting several statutory deductions right, every month, for every employee. Mistakes are costly: penalties, interest and disputes. This guide explains the main deductions Kenyan employers must handle.

PAYE (Pay As You Earn)

PAYE is income tax deducted from employees' salaries and remitted to the Kenya Revenue Authority (KRA) through iTax. It is calculated on graduated tax bands, with personal relief applied. Employers must register for PAYE, deduct the correct amount each month, and remit by the statutory deadline.

NSSF (National Social Security Fund)

NSSF is a mandatory pension contribution. Both employer and employee contribute, on a tiered basis. Employers register with NSSF, deduct the employee share, add the employer share, and remit monthly.

SHIF (Social Health Insurance Fund)

SHIF replaced NHIF in 2024 as Kenya's mandatory health contribution. It is calculated as a percentage of gross pay, deducted and remitted by the employer on behalf of employees.

Affordable Housing Levy

The Affordable Housing Levy is deducted from gross pay, with a matching employer contribution, and remitted within the statutory timeline.

HELB and other deductions

Where applicable, employers also process HELB (student loan) repayments and any court-ordered or agreed deductions.

Getting payroll right

Rates and thresholds change, so it pays to stay current. Accurate payroll protects your business and your people, which is why many Kenyan businesses outsource payroll to avoid errors and keep up with changes. See our HR outsourcing and HR compliance services.

Disclaimer: This article is general guidance for educational purposes and is not legal advice. Statutory rates and requirements change. For advice specific to your organisation, speak to a qualified HR or legal professional.