Kenyan President William Ruto has announced a sweeping new package of tax relief measures designed to shield low- and middle-income earners from the country’s persistent cost-of-living crisis. Speaking at the State House on Wednesday, February 4, 2026, the president unveiled a plan to significantly raise the tax-free income threshold, a move he characterized as the practical fulfillment of his “bottom-up” economic agenda.
Under the new proposal, the minimum monthly income exempt from Pay As You Earn (PAYE) tax will rise from KSh24,000 to KSh30,000 (approximately $233). According to government estimates, this change will see roughly 1.5 million Kenyans stop paying income tax entirely. Furthermore, for those earning between KSh30,000 and KSh50,000, the tax rate will be slashed from 30% to 25%, providing relief to an additional 500,000 workers.
“When we said ‘bottom up,’ it was not a slogan,” President Ruto told a gathering of supporters and aspirants. “It was because we wanted to mind about the people at the bottom of the pyramid and allow them to live decently.”
The relief package also extends to high-income earners, with the top tax rate set to be capped at 30%, down from the current 32.5% to 35% range. Treasury Cabinet Secretary John Mbadi explained that these adjustments are intended to boost disposable income, stimulate domestic consumption, and improve overall tax compliance by making the system more equitable.
The timing of the announcement is critical, as the Kenyan economy shows signs of stabilization. The President cited falling inflation, improved foreign exchange reserves, and recent credit rating upgrades as evidence that the country is turning a corner. However, the proposed changes are not yet law; they must first be passed by Parliament as part of the Tax Laws Amendment Bill before the full Finance Bill 2026 is presented later this year.
These reforms represent a significant shift in Kenya’s fiscal policy, moving away from the aggressive tax hikes of 2023 toward a strategy of household stabilization. While critics question if the relief is enough to offset broader inflationary pressures, for millions of Kenyan workers, the prospect of a heavier monthly payslip offers a rare glimmer of economic optimism.
