Kenya has one of East Africa’s most dynamic labor markets, and interest from international companies looking to hire there has grown steadily. But hiring in Kenya means taking on a set of statutory obligations that go well beyond just paying a salary. As an employer, you’re responsible for calculating and remitting contributions to multiple government schemes each month, as well as withholding income tax on behalf of your staff. Getting this right from day one matters: penalties for late or incorrect remittances add up quickly, and Kenya’s Revenue Authority runs payroll audits.
This guide covers every employer tax obligation you’ll encounter when you hire employees in Kenya in 2026, including the changes that took effect under updated NSSF rules earlier this year.
How employer taxes work in kenya
Kenya operates a pay-as-you-earn system for income tax, meaning you deduct tax from your employees’ salaries at source and remit it to the Kenya Revenue Authority (KRA). On top of that, you’re required to contribute to and administer three statutory schemes: the National Social Security Fund (NSSF), the Social Health Insurance Fund (SHIF), and the Affordable Housing Levy. Each has its own rate, calculation base, and remittance deadline.
The standard working week in Kenya is 45 hours, capped at 8 hours per day. The minimum wage in major cities sits at approximately KES 16,113.75 per month as of early 2026, though rates vary by region and industry. Security services, for example, carry higher minimums under sector-specific union agreements.
All remittances for the schemes covered in this guide are due by the 9th of the following month.
Nssf contributions
The National Social Security Fund provides retirement benefits to Kenyan workers. After years of legal challenges, the NSSF Act 2013 was confirmed constitutional by the Supreme Court in February 2024, and the new contribution rates took effect on February 1, 2026.
The scheme now operates on a two-tier structure based on pensionable earnings.
How the tiers work
Tier I covers the Lower Earnings Limit of KES 9,000 per month. Both you and your employee each contribute 6% of this amount, which comes to KES 540 per side, per month.
Tier II covers earnings between KES 9,000 and the Upper Earnings Limit of KES 108,000 per month. Both sides again contribute 6% of the amount that falls within this band.
The maximum monthly contribution is KES 6,480 per side, reached when an employee’s pensionable earnings hit KES 108,000. The combined monthly cap is KES 12,960 total (employer plus employee).
For employees earning above KES 108,000, contributions are capped at the maximum. Contributions don’t increase beyond that ceiling regardless of salary level.
Private scheme option
If your company operates an approved registered private pension scheme, you can direct Tier II contributions there instead of to NSSF. Tier I contributions always go to NSSF. You’ll need to confirm your scheme holds the required approvals before redirecting Tier II.
Shif: health insurance
The Social Health Insurance Fund replaced the former National Hospital Insurance Fund (NHIF) in October 2024. SHIF covers health insurance for Kenyan workers and their dependants.
Unlike NSSF, SHIF is an employee-side contribution only. Your role as the employer is to deduct it from the employee’s gross monthly salary and remit it to the fund on their behalf. There’s no employer match for SHIF.
The rate is 2.75% of the employee’s gross monthly salary. The minimum contribution is KES 300 per month, and there’s no upper cap, so higher-earning employees will see larger SHIF deductions. Remittance is due by the 9th of the following month, consistent with the other statutory schemes.
The affordable housing levy
The Affordable Housing Levy funds Kenya’s national housing program. Unlike SHIF, this one does carry an employer contribution.
Both you and your employee each contribute 1.5% of the employee’s gross monthly salary. There’s no cap on the levy, so it scales proportionally with salary at all income levels.
On a practical level, this means that for every KES 100,000 in gross monthly salary, you’re contributing KES 1,500 on the employer side, and deducting another KES 1,500 from the employee.
Paye income tax withholding
Pay As You Earn (PAYE) is Kenya’s income tax system for employees. You don’t pay PAYE yourself as the employer, but you’re legally responsible for calculating it correctly, deducting it from each employee’s pay, and remitting it to the KRA by the 9th of the following month.
The rates below are the Finance Act 2023 bands, which remain in force for 2026:
| Monthly taxable income (KES) | Tax rate |
|---|---|
| First 24,000 | 10% |
| Next 8,333 (24,001 to 32,333) | 25% |
| Next 467,667 (32,334 to 800,000) | 30% |
| Next 300,000 (800,001 to 1,100,000) | 32.5% |
| Above 1,100,000 | 35% |
Every employee is entitled to a personal relief of KES 2,400 per month (KES 28,800 per year), which is deducted from the tax payable after you’ve applied the bands above. So if an employee’s calculated tax liability is KES 4,200, they owe KES 1,800 after relief.
Additional reliefs may apply depending on the employee’s circumstances, but the personal relief is universal and you should always apply it.
Total employer cost
When you’re budgeting for a Kenyan hire, the salary figure on the offer letter isn’t the full picture. Your employer-side statutory obligations add a meaningful amount on top.
Here’s a summary of what you’re responsible for paying as the employer:
| Contribution | Rate | Cap |
|---|---|---|
| NSSF (employer share) | 6% of pensionable earnings | KES 6,480/month |
| Affordable Housing Levy | 1.5% of gross salary | None |
| Total employer statutory cost | ~7.5% of salary | Partially capped |
PAYE and SHIF are employee-borne, but you’re the one doing the calculations and making the remittances. Errors in either create liability for your company, not just for the employee.
For most salary levels, your real cost of employment runs approximately 7.5% above the gross salary figure, plus any sector-specific levies that may apply in your industry.
How an EOR simplifies kenyan payroll compliance
Running payroll in Kenya means tracking contribution thresholds that change, submitting to multiple government portals, and keeping up with regulatory updates like the 2026 NSSF changes. For foreign companies without a local entity, that’s a significant operational burden.
An Employer of Record (EOR) takes on the legal employer role in Kenya on your behalf. The EOR runs payroll, calculates and remits NSSF, SHIF, and Housing Levy contributions, handles PAYE withholding, and stays current with regulatory changes so you don’t have to. You retain full control of the work relationship: the EOR handles compliance.
If you want to understand more about how the model works before committing, the RemotePass guide to what an employer of record is walks through the structure in detail. And if you’re evaluating providers, the roundup of EOR services covers what to look for when comparing options.
Start hiring in kenya with confidence
Kenya’s employer tax framework is manageable once you understand the moving parts, but the compliance burden is real. Between NSSF’s two-tier structure, SHIF’s gross-salary-based calculation, the Housing Levy, and monthly PAYE filings, there’s a lot to stay on top of.
RemotePass helps international teams hire in Kenya without setting up a local entity, handling the payroll, statutory contributions, and compliance so your team can focus on the work. If you’re ready to bring Kenyan talent onto your team, get in touch with RemotePass to see how quickly you can get started.
