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2026 KRA rates, instant
Cash salary allowances are generally taxable in Kenya. Describing part of your pay as a house, commuter, telephone or medical allowance does not by itself remove it from PAYE. The purpose and legal treatment of the payment matter more than its label.
Enter the total relevant cash salary in the PAYE calculator, including taxable allowances. First check whether the stated gross figure already contains them: adding the same allowance twice overstates both earnings and deductions.
Which common allowances are taxable?
| Payment | What to check |
|---|---|
| Cash house allowance | Normally part of cash employment income; distinguish it from employer-provided housing. |
| Regular commuter allowance | Cash paid for ordinary commuting is not automatically a business-expense reimbursement. |
| Cash medical allowance | Do not assume the treatment of employer-provided medical cover applies to cash paid to you. |
| Telephone or entertainment allowance | A fixed cash salary component needs to be distinguished from a supported business expense. |
KRA's guidance on cash allowances and its employer PAYE guide explain the distinction between remuneration and reimbursement. The older guide is useful for classification; its historical rates and limits should not be used for a current calculation.
When is a reimbursement different?
Repaying an employee for a qualifying expense incurred in performing their work is different from giving them a general spending allowance. Keep the business purpose, dates, approval and receipts or other supporting evidence. A receipt alone does not establish that a personal cost was incurred wholly for employment.
For mileage, KRA's current PAYE page says reimbursement above AA Kenya rates is taxable on the employee. Do not assume that calling a payment “mileage” makes any amount exempt. Travel and subsistence arrangements require their own applicable conditions and evidence; this article does not set a universal tax-free daily allowance.
Example: an allowance already inside gross salary
An offer states KES 70,000 basic salary, KES 20,000 house allowance and KES 10,000 commuter allowance, giving KES 100,000 gross cash pay. The starting total is KES 100,000, not KES 130,000. Neither cash allowance disappears merely because it has its own line on the payslip.
Payroll then applies relevant contributions, allowable deductions and tax reliefs. The difference between gross and taxable pay explains why KES 100,000 gross is not necessarily KES 100,000 taxable income.
Cash allowances and benefits in kind are different
A company house or car can create taxable value without giving you cash. A cash allowance gives you cash remuneration. Do not apply a company-car valuation formula to a cash transport allowance or subtract a non-cash benefit's entire value from cash earnings as if it were a payment already received.
Use the benefits-in-kind guide for that separate question, alongside the employment situations guide.
Questions to send payroll before accepting a package
- Is the quoted salary basic pay or the full gross package?
- Which allowances are fixed cash remuneration?
- Which payments require actual business expenses and supporting records?
- How is each item treated for PAYE and each statutory contribution?
- Does the written offer match the payroll breakdown?
Request a worked payslip using your actual package. Renaming existing salary as an allowance is not, on its own, a tax saving. If a promised net figure differs from the calculation, resolve the assumptions in writing before relying on it.
Sources and review date
Published and reviewed on 27 October 2026. Use the rules applicable to the period being assessed.