Tax on your bonus
13th-month + bonus, instant
A bonus or 13th-month salary is generally employment income for PAYE. There is no universal separate “bonus tax rate”, and a collective bargaining agreement does not itself create an income-tax exemption. The correct result depends on the income period, the employee’s other pay and the payment’s classification.
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What changes in a bonus month?
The taxable bonus increases employment income. In a simple current-period calculation, compare tax on ordinary taxable pay with tax after adding the bonus; the difference is the additional PAYE. Where all the extra taxable amount stays in the 30% slice, an extra KES 10,000 of taxable income adds KES 3,000 PAYE. Crossing a band boundary changes the rate on only the slice above it.
Do not duplicate personal relief
Personal relief is not granted again because salary and bonus are paid separately. Use the combined payroll calculation and the correct tax period. Tax withheld is reconciled against the year’s liability; a bonus does not automatically entitle you to a refund.
Past-service bonuses and arrears
Payments relating to earlier periods can require allocation under KRA’s lump-sum guidance rather than a crude multiplication of one month’s tax. Ask payroll which period the payment relates to and request its calculation. Historical examples in the older KRA guidance explain allocation but use old tax bands; they are not current-rate calculators.
Check contributions separately
A PAYE-taxable payment is not automatically treated identically for NSSF, SHIF and Housing Levy. KRA’s Housing Levy clarification excludes irregular payments such as one-off bonuses from the gross monthly salary definition. A regular contractual payment requires classification based on its substance. NSSF depends on pensionable pay and the ceiling; use the relevant scheme rules rather than blindly adding every deduction percentage.
What to request from payroll
- The gross bonus and period earned.
- The ordinary and bonus-inclusive taxable pay calculations.
- The treatment under each statutory contribution.
- Reliefs already used in the period.
- The net cash bonus and supporting payslip.
A contractual 13th-month payment and a discretionary performance bonus may have different employment entitlements even where both are taxable. Read your contract or collective agreement for the entitlement, then apply the tax rules separately.
See terminal dues for payments on leaving a job, and the PAYE bands for the underlying calculation.
Sources and review date
Reviewed on 21 October 2026. Use the rules for the period being calculated; historical payslips may use different limits.