Kenya Revenue Authority (KRA) wishes to inform employers, employees, and the general public that the Finance Act, 2025, amended the Income Tax Act, Cap 470 (“the Act”) to mandate employers to apply all relevant tax deductions, reliefs, and exemptions when computing income tax on employee emoluments.

In line with this amendment, KRA provides the following guidance to employers:

1. Apply personal relief to all resident employees as stipulated under the Act.

2. Allow insurance relief, mortgage interest deductions, and contributions to registered pension schemes and Post-Retirement Medical Funds — provided these are declared by the employee and supported by the necessary documentation, and fall within the statutory limits.

3. Deduct statutory levies and contributions paid by employees, such as the Affordable Housing Levy and contributions to the Social Health Insurance Fund, in accordance with the Act.

4. Recognize and apply tax exemptions for employees who hold valid tax exemption certificates, subject to the prescribed limits.

5. Ensure accurate and timely submission of PAYE returns, reflecting all applicable reliefs, deductions, and exemptions.

6. Employees are advised to promptly provide their employers with all required documentation to support claims for deductions and reliefs, where applicable.

Commissioner for Micro & Small Taxpayers