Taxes in Kenya for Expats 2026: The Health Levy Cap Is Gone
KENYA · EXPAT GUIDE
Key Facts
- —The residency trap A leased home plus a single day in the country makes you tax resident.
- —The top rate Thirty-five percent starts at about US$6,180 a month, a low threshold internationally.
- —The health levy 2.75% of gross salary with no upper cap, replacing a scheme capped at about US$13.
- —What that means A high earner can pay roughly sixteen times what the old scheme cost.
- —The housing levy A further 1.5% from the employee, matched by the employer, deductible against income tax.
- —The catch Any guide still naming the old health fund is describing a scheme repealed in 2024.
The income tax bands here have not moved in three years. Everything bolted on beside them has, and one change costs high earners a fortune.
The income tax table in Kenya has not changed since July 2023. That is the least interesting thing about paying tax here.
What has changed sits beside the table, in the levies deducted from the same payslip. One of them has no ceiling any more.
When You Become Resident
Three tests exist and meeting any one of them makes you resident. The day count is the one everybody knows and the least likely to catch you.
You are resident if you spent 183 days or more in the country in the year of income. You are also resident if your presence averaged more than 122 days a year across this year and the two before it.
That second test catches rotational workers who think they are safe under six months. It is worth checking against a three-year calendar rather than one.
The third test is the trap. You are resident if you have a permanent home in Kenya and were present for any period at all in the year.
Since July 2022 a permanent home has a statutory definition. It is a place where you reside, or which is available for your residence.
It is also where your personal or economic interests are closest. The tax commissioner makes that assessment.
A leased house in Karen plus one day in the country therefore makes you resident. The lease, not the calendar, is what decides it.
What Residents Are Taxed On
Residents are taxed on worldwide earned income, whether the employment or services were performed here or abroad. Other income is taxed where it accrues in or derives from the country.
That is narrower than most people assume. Kenya does not tax a resident’s passive and investment income worldwide the way the United States or Britain does.
Non-residents are taxed only on income earned in or derived from Kenya. They pay the same graduated bands on local employment income.
The Bands
The first 24,000 shillings a month, about US$185, is taxed at ten percent. The next 8,333 shillings, some US$64, is taxed at twenty-five.
From there to 500,000 shillings a month, near US$3,860, the rate is thirty percent. The next 300,000 shillings, some US$2,320, is taxed at 32.5 percent.
Above 800,000 shillings a month the rate is thirty-five percent. That is about US$6,180, which is a low threshold by international standards.
Most expatriate packages clear it. Plan on the top rate applying to the bulk of your salary.
The Reliefs
Personal relief is 2,400 shillings a month, about US$18.50, or 28,800 a year. Non-residents get none of it.
Insurance relief covers fifteen percent of premiums on life, health or education policies, capped at 60,000 shillings a year, some US$464. Education policies must run at least ten years.
Three items come off before income tax is calculated. Mortgage interest and pension contributions are each deductible up to 30,000 shillings a month, about US$232.
Health and housing levy contributions are also deductible. That softens the blow of the changes below, but only slightly.
The Change That Costs the Most
The national hospital insurance fund no longer exists. The Social Health Insurance Act repealed it and a new fund replaced it from October 2024.
Any guide still naming the old fund is describing a repealed scheme. That matters because the two work completely differently.
The old fund charged a maximum of 1,700 shillings a month, about US$13, for anyone earning above 100,000 shillings, some US$773. The new one charges 2.75 percent of gross salary with no cap at all.
The arithmetic is brutal at the top. Someone earning a million shillings a month, some US$7,725, now pays 27,500 shillings, about US$212.
That is roughly sixteen times more. The minimum is 300 shillings a month, some US$2.30.
Non-salaried people pay the same percentage of household income. There is no ceiling for them either.
One further caution. At least one major advisory summary renders the rate as 2.5 percent, and the statutory figure is 2.75.
The Housing Levy
A separate affordable housing levy takes 1.5 percent of gross monthly salary from the employee. The employer matches it.
Employee contributions are deductible for income tax. Beyond that you have no individual claim on the money unless you apply for affordable housing.
It is a levy, not a savings scheme. Budget it as tax.
Pension Contributions
The national social security fund moved to twelve percent in total from February 2026, split evenly between employee and employer. The lower tier is 540 shillings each side, about US$4.
The upper tier is 5,940 shillings each side, about US$46. It is calculated on the gap between the 108,000 shilling upper limit, about US$834, and the 9,000 shilling lower one.
The combined maximum is 12,960 shillings a month, about US$100. That limit has been ratcheting up each year.
That upper earnings limit has been ratcheting up annually under a transition schedule. It is the single biggest year-on-year payroll change most foreign staff notice.
Withholding Tax
Dividends to a non-resident carry fifteen percent whatever the shareholding. A resident pays five percent below a 12.5 percent holding and nothing above it.
Interest carries fifteen percent for both. Royalties carry five percent for a resident and twenty for a non-resident.
Management and professional fees follow the same split of five and twenty. Rent from immovable property paid to a non-resident carries thirty percent.
One rate changed this year and it is easy to miss. The preferential five percent dividend rate for East African Community citizens was repealed by the Finance Act 2026.
Other 2026 changes reintroduced a twenty percent levy on winnings and a 1.5 percent levy on scrap metal. Card interchange and merchant service fees were reclassified as professional fees for withholding.
What to Check Before You Sign
Work out whether your housing arrangement makes you resident. If your employer leases a house for you, assume it does.
Model the health levy on your actual gross, not on the old capped figure. On a senior package it is the largest single change of the last two years.
And check whether your home country has a double taxation agreement with Kenya. That is the difference between a manageable bill and paying twice.
More: Africa news in English, every day from The Rio Times.
Frequently Asked Questions
When am I tax resident in Kenya?
If you spend 183 days or more in the year, or average more than 122 days across three years, or have a permanent home here and were present for any period at all. The permanent-home test is the one that catches people.
What are the income tax rates?
Ten percent on the first 24,000 shillings a month, then twenty-five, then thirty, then 32.5, with thirty-five percent above 800,000 shillings a month, about US$6,180.
What happened to the old health fund?
It was repealed and replaced from October 2024. The new fund charges 2.75 percent of gross salary with no cap. The old one was capped at 1,700 shillings a month, about US$13.
How much does that cost a high earner?
Someone on a million shillings a month pays 27,500 shillings, about US$212, against 1,700 shillings, some US$13, under the old scheme. That is roughly sixteen times more.
Does Kenya tax worldwide income?
Residents are taxed on worldwide earned income from employment or services. Passive and investment income is not taxed on a full worldwide basis the way the United States or Britain does it.
Sources: Kenya Revenue Authority, PwC Worldwide Tax Summaries last reviewed 17 July 2026, the Finance Act 2026 as analysed by EY, Vialto Partners on the Social Health Insurance Fund, and the NSSF Act 2013 transition schedule.
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