Statutory Deductions

Kazisafi automatically calculates all statutory deductions required under Kenyan law. This page explains each deduction, how it is calculated, and how they interact with one another.

Calculation Order

Some deductions reduce the income used to calculate others, so the order matters. Kazisafi calculates them in this sequence:

1. NSSF — deducted first, reduces taxable income
2. SHIF — deducted second, reduces taxable income
3. Affordable Housing Levy — deducted third, reduces taxable income
4. PAYE — calculated last, on the remaining taxable income

PAYE (Pay As You Earn)

PAYE is Kenya’s income tax, calculated on a progressive scale. The more an employee earns, the higher the rate applied to the upper portion of their income.

Tax Bands

Monthly Taxable Income (KES)	Rate
Up to 24,000	10%
24,001 to 32,333	25%
32,334 to 500,000	30%
500,001 to 800,000	32.5%
Above 800,000	35%

Taxable Income

Taxable income is calculated by subtracting the following from gross salary:

• NSSF employee contribution
• SHIF employee contribution
• Affordable Housing Levy (employee portion)
• Registered pension contributions (capped at the lesser of: actual contribution, KES 30,000, or 20% of gross salary)
• Mortgage interest (capped at KES 25,000 per year)

Tax Reliefs

After calculating the tax amount, the following reliefs are subtracted:

Relief	Amount
Personal Relief	KES 2,400 per month
Insurance Relief	15% of insurance premiums, up to KES 5,000 per month

The final PAYE amount is the tax from the bands minus applicable reliefs. PAYE is never negative. If reliefs exceed the calculated tax, PAYE is zero.

NSSF (National Social Security Fund)

NSSF uses a two-tier contribution system. Both the employer and the employee contribute equal amounts.

Tier	Earnings Range (KES)	Rate	Maximum Contribution
Tier 1	0 to 9,000	6%	KES 540
Tier 2	9,001 to 108,000	6%	KES 5,940

The maximum monthly contribution is KES 6,480 per person (employee and employer each pay up to KES 6,480).

SHIF (Social Health Insurance Fund)

SHIF replaced the former NHIF and is calculated as a percentage of gross salary.

Detail	Value
Rate	2.75% of gross salary
Minimum	KES 300 per month
Split	Equal employer and employee contributions

Both the employer and the employee contribute 2.75% of gross salary, with a minimum of KES 300 each per month.

Affordable Housing Levy (AHL)

The Affordable Housing Levy funds the government’s affordable housing program.

Detail	Value
Rate	1.5% of gross salary
Employer	1.5% of gross salary
Employee	1.5% of gross salary

Both parties contribute equally at 1.5% of the employee’s gross salary.

NITA (National Industrial Training Authority)

NITA is a flat-rate levy paid entirely by the employer.

Detail	Value
Amount	KES 50 per employee per month
Paid By	Employer only

Employees are not charged for NITA. It does not appear as a deduction on payslips but is included in employer cost reports.

HELB (Higher Education Loans Board)

HELB loan repayments are tracked as employee deductions for employees who have outstanding education loans.

• The deduction amount is set per employee based on their HELB repayment schedule.
• Kazisafi generates a HELB export file for submission to HELB.

Staying Up to Date with Rates

Statutory rates change as the government updates tax and contribution laws. Kazisafi keeps your payroll calculations current by applying the correct rates for each year automatically. Past payroll calculations always retain the rates that were in effect when they were processed, so your historical records remain accurate.