The Central Organisation of Trade Unions (COTU-K) has welcomed President William Ruto’s proposal to exempt Kenyan workers earning up to Sh32,333 per month from Pay As You Earn (PAYE) income tax, calling on Parliament to fast-track its implementation.
COTU Secretary-General Francis Atwoli said the proposed exemption would provide relief to low-income workers who have continued to face pressure from taxation and the rising cost of living.
In a statement issued following Ruto’s Mashujaa Day address in Eldoret on Tuesday, October 20, 2026, Atwoli described the proposal as an important step towards reducing the tax burden on ordinary workers and increasing the amount of money they take home each month.
“Exempting this category of wage earners from PAYE is a huge step by the President to cushion these low-income earners from heavy taxation,” Atwoli said, according to the Kenya Broadcasting Corporation.
He added that the measure would put more money in workers’ pockets, particularly those employed in the private sector, where many unionisable employees fall within the affected income bracket.
The union urged lawmakers to expedite consideration of the proposal, which Ruto said would be presented to Parliament beginning next week.
Ruto announces tax relief package
The proposed PAYE exemption forms part of a broader package of measures announced by the President during the Mashujaa Day celebrations at Kipchoge Keino Stadium in Eldoret.
Ruto said the government’s economic position had created room to ease financial pressure on sections of the population and ensure more Kenyans benefited from economic progress.
“The stability we have achieved in our economy now affords us an opportunity to ease the burden on sections of our population and ensure that more Kenyans share in the benefits of our progress,” the President said.
Alongside the PAYE proposal, the package includes plans to remove the 25 per cent import duty on mobile phones, expand the national internship programme to accommodate 50,000 young people from January 1, 2027, and introduce stamp-duty relief for land transactions valued at Sh1 million or less.
The proposed mobile-phone tax relief is intended to make devices more affordable and widen access to digital employment opportunities, while the expanded internship programme is expected to provide young people with additional pathways into the labour market.
The Treasury is also considering progressive stamp-duty rates for higher-value land transactions.
COTU has welcomed several of these measures, arguing that lower costs and increased access to digital platforms could help young people explore new income-generating opportunities.
A long-awaited promise to low-income workers
The latest announcement follows months of debate over the government’s commitment to exempt lower-paid workers from PAYE.
In February 2026, Treasury Cabinet Secretary John Mbadi announced plans to exempt more than 1.5 million employed Kenyans earning Sh30,000 or less per month from the tax.
Ruto subsequently backed the proposal, but the relief was not included in the 2026/2027 Budget presented in June, prompting renewed questions about when the government would implement the commitment.
At the time, Mbadi maintained that the proposal remained under consideration and would be pursued through subsequent tax amendments.
The new proposal raises the threshold to Sh32,333 per month, potentially extending the benefit to additional workers if Parliament approves the necessary legal changes.
According to figures cited in reporting by Citizen Digital, Kenya has approximately 3.65 million salaried workers, with about 1.5 million earning Sh30,000 or less per month.
The final number of workers who would benefit from the revised threshold will depend on the legislation’s precise terms and the distribution of taxable earnings.
COTU pushes for wider tax reforms
Although welcoming the President’s announcement, COTU has previously argued that tax relief should extend beyond the lowest-paid workers.
In its submissions on the Finance Bill 2026, the union proposed a review of the PAYE structure for employees earning up to Sh60,000 per month.
Atwoli argued that workers’ disposable incomes had been eroded by the combined pressure of taxation and rising living costs, calling for a more balanced approach to revenue collection.
The union has maintained that giving workers more disposable income could stimulate domestic consumption, support businesses and contribute to economic growth.
Its broader proposals have included raising the tax-free income threshold, reviewing PAYE bands and adjusting the bands periodically to account for inflation.
The latest presidential proposal addresses only part of that agenda, focusing on workers earning up to Sh32,333 monthly.
For employees earning above that amount, the impact will depend on the final legislation and whether the government introduces further changes to the income-tax structure.
What the proposed exemption means for workers
PAYE is the income tax deducted from employees’ taxable earnings by their employers and remitted to the Kenya Revenue Authority.
If the proposed exemption is approved and implemented as announced, workers within the eligible income bracket would no longer have PAYE deducted from their salaries, potentially increasing their take-home pay.
However, the exemption would not automatically eliminate other statutory payroll deductions, including applicable National Social Security Fund contributions, Social Health Insurance Fund contributions and the Affordable Housing Levy.
The actual increase in take-home pay would therefore depend on an employee’s earnings, existing deductions and the final rules governing the exemption.
The proposal also remains subject to parliamentary consideration. Until the required legal changes are approved and take effect, eligible workers should not assume that their PAYE deductions have automatically ceased.
Parliament urged to act swiftly
COTU has called on Parliament to accelerate debate and approval of the proposal, arguing that low-income workers should not face unnecessary delays in receiving the promised relief.
The union’s support adds to pressure on lawmakers and the Treasury to clarify the implementation timetable after the earlier proposal failed to feature in the 2026/2027 Budget.
For the government, the challenge will be to balance the proposed reduction in income-tax revenue against the objective of improving household finances.
For workers, the central question is how quickly the promise will translate into changes on their payslips.
As Parliament prepares to consider the proposal, COTU’s endorsement has placed the interests of lower-paid employees firmly at the centre of the debate over taxation, disposable income and the cost of living.
