Tax Reliefs in Kenya: How to Reduce What You Pay to KRA Legally

Your payslip shows the PAYE deducted. What it usually doesn't show is how much lower that number could legally be. Kenya's Income Tax Act provides several reliefs that reduce your taxable income or directly cut the amount of PAYE you owe — but you have to actively claim most of them by informing your employer or filing correctly on iTax.

Here is every relief available to individual employees in Kenya, how much each one saves, and exactly how to claim it.

1. Personal Relief — KES 2,400 Per Month

This is the one everyone gets automatically. Personal relief is KES 2,400 per month (KES 28,800 per year) and is deducted directly from your calculated PAYE. Every individual taxpayer with a KRA PIN receives it — employed, self-employed, or otherwise.

It doesn't reduce your taxable income; it reduces the tax itself. So if your PAYE calculation comes out at KES 10,000, the personal relief brings it down to KES 7,600. Your employer applies this without you doing anything.

The issue is that many employees think this is the only relief available. It isn't.

2. Insurance Relief — Up to KES 5,000 Per Month

If you pay premiums for life insurance, education insurance, or health insurance to a Kenya-approved insurer, you qualify for insurance relief of 15% of the premiums paid, up to a maximum of KES 5,000 per month (KES 60,000 per year).

Unlike personal relief, this one directly reduces your PAYE. If you pay KES 3,000 per month in life insurance premiums, your insurance relief is KES 450 per month (15% × KES 3,000) — that is KES 450 less in PAYE every month, or KES 5,400 per year.

To claim it through your employer, submit your insurance policy document and premium receipts to your HR or payroll department. They will adjust the monthly PAYE deduction accordingly. You can also claim it on your annual tax return if you forget to submit mid-year.

The policy must be with a Kenya-registered insurer (APA, Britam, CIC, Jubilee, Madison, Old Mutual, Sanlam, etc.). International policies generally do not qualify.

3. Mortgage Interest Relief — Up to KES 25,000 Per Month

This is the most valuable relief most employees never claim. If you have a mortgage on your own home — the property you actually live in, not a rental — the interest portion of your monthly mortgage payment is deductible from your taxable income, up to KES 25,000 per month (KES 300,000 per year).

Here's what that means in practice. At a 14% annual interest rate on a KES 6,000,000 mortgage, the early years are heavily weighted toward interest — your monthly payment of around KES 67,000 might include KES 55,000–60,000 in interest initially. You can claim KES 25,000 of that per month as a relief.

If you are in the 30% PAYE band (income above KES 500,001 per year), KES 25,000 per month of mortgage interest relief saves you KES 7,500 per month in PAYE — that's KES 90,000 per year back in your pocket.

To claim: get a monthly or annual statement from your bank showing the interest component of your mortgage payments. Submit this to your employer's payroll team so they can adjust your PAYE. Alternatively, declare it on your annual iTax return.

The mortgage must be with a registered financial institution in Kenya. The property must be your primary residence. Investment properties and rental properties do not qualify.

4. Pension and Retirement Scheme Contributions — Up to KES 20,000 Per Month

Contributions to a registered pension scheme or provident fund are deductible from your taxable income, up to KES 20,000 per month (KES 240,000 per year). This includes NSSF contributions, your employer's occupational pension scheme, and contributions to a personal retirement fund registered with the Retirement Benefits Authority (RBA).

If your employer runs a pension scheme and you are contributing to it, you are already receiving this relief — it reduces your taxable income before PAYE is calculated. If your employer does not run a scheme, or if your contribution is below the maximum, you may be able to make voluntary top-up contributions to a registered personal pension to claim additional relief.

At the 30% tax band, the maximum pension deduction of KES 20,000 per month saves you KES 6,000 per month in PAYE — KES 72,000 per year.

5. Post-Retirement Medical Fund — Up to KES 15,000 Per Month

Contributions to a post-retirement medical fund — a fund specifically set up to cover healthcare costs after retirement — are also deductible, up to KES 15,000 per month (KES 180,000 per year). This is less commonly used but available to employees whose companies offer such schemes.

6. Disability Exemption

If you have a recognised disability and hold a valid certificate from the National Council for Persons with Disabilities (NCPWD), your income is exempt from tax up to KES 150,000 per month. This is a significant relief. The certificate must be renewed periodically and submitted to KRA to maintain the exemption.

How Much Could You Actually Save?

Adding up the maximum values of the most commonly available reliefs:

Relief	Max Monthly Relief	Max PAYE Saving/Month (30% band)	Max PAYE Saving/Year
Personal relief	KES 2,400 (direct)	KES 2,400	KES 28,800
Insurance relief	KES 5,000 (direct)	KES 5,000	KES 60,000
Mortgage interest	KES 25,000 deduction	KES 7,500	KES 90,000
Pension contributions	KES 20,000 deduction	KES 6,000	KES 72,000
Total		KES 20,900	KES 250,800

That is a potential KES 250,800 per year in PAYE savings for someone in the 30% band who fully claims all available reliefs. In practice, few people qualify for all of these simultaneously at maximum levels, but even claiming one or two reliefs makes a real difference.

How to Claim Your Reliefs

The process is straightforward but requires action on your part — your employer's payroll system will only apply reliefs you formally notify them about.

Insurance relief: Write to HR or payroll with your insurance policy document and a premium receipt (or annual premium statement). They update your PAYE calculation going forward.

Mortgage interest relief: Request an annual or monthly statement from your bank showing the interest component broken out from the principal repayment. Submit to payroll. Banks such as KCB, Equity, ABSA, and Stanbic typically generate these on request.

Pension contributions: If your employer runs a pension scheme, this is usually handled automatically. If you have a personal pension top-up, provide the contribution certificates to payroll.

Annual return method: If you miss claiming during the year, you can still claim all reliefs when filing your annual income tax return on iTax by 30 June. KRA will calculate any over-deduction and issue a refund or credit.

Timing: When to Submit Your Claim

The sooner you submit to payroll, the sooner your PAYE drops. Practically speaking, most companies lock their payroll in the last week of each month — if you submit before then, the adjustment takes effect that month. After that, it goes to the following month.

For the annual return, document everything by December of each year to make year-end reconciliation easier. KRA requires supporting documents if you are audited, so keep copies of all insurance certificates, mortgage statements, and pension contribution records.

What Does Not Count as a Relief

A few things employees sometimes confuse with tax reliefs:

• Rent payments — not deductible for employees (only for business use of a home office under self-employment)
• School fees — not deductible (education insurance is separate from school fees themselves)
• Medical expenses — only through the post-retirement medical fund deduction; general out-of-pocket medical is not deductible for employed individuals
• Car purchase or car loan — not deductible for employees
• Personal loan interest — not deductible

The reliefs available in Kenya are narrower than in some other countries, which makes it even more important to claim every one you do qualify for. If you have a life insurance policy and a mortgage, and you have never submitted those documents to your employer, you could be overpaying PAYE by KES 10,000–15,000 every month. That is worth a short email to HR.