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2026 KRA rates, instant
Yes. Cash paid for unused leave is generally taxable employment income in Kenya. The fact that you earned the days earlier, or receive the money after leaving a job, does not automatically exempt the payment. First confirm the leave balance and gross value; then check the period used to calculate tax.
Use the Kenya PAYE calculator to understand ordinary salary deductions. It is not a terminal-settlement calculator: a payment allocated across periods needs a separate payroll calculation. The employment and tax guide explains the wider context.
Start with the leave balance, not the tax percentage
Ask for a statement showing opening days, days earned, leave taken, approved adjustments and the closing balance being paid. Reconcile it to leave approvals and your employment terms. A payroll figure cannot establish whether an omitted day should have been paid.
Keep leave taken on full salary separate from a cash payment replacing untaken leave. Also distinguish annual leave from other absence categories; do not assume every recorded absence produces an encashment entitlement. This article explains tax on a payment that is due, rather than promising a universal right to cash out leave while still employed.
Match the payment to the year of the leave
KRA's lump-sum guidance says leave pay belongs to the year to which it relates. A schedule by year therefore matters when a final balance includes carried-forward days.
For example, a payment made in 2026 may include days attributable to 2025 and 2026. Ask payroll for that split and the supporting tax workings. Do not put the entire amount into an ordinary monthly calculator and assume its result settles the historical calculation. See salary arrears and PAYE for a related timing issue.
Worked example: check days and gross value
Assume the employer confirms 12 payable days and a documented daily rate of KES 2,000. The gross leave payment is 12 × KES 2,000 = KES 24,000. If five days relate to one year and seven to the next, the corresponding gross amounts are KES 10,000 and KES 14,000.
The daily rate here is an illustration, not a rule that all employers must divide salary by 30 or 26. Ask which pay elements and divisor were used under the applicable terms. A disagreement about the rate changes the gross payment before tax is considered.
Check the additional tax, not just the withholding line
The employer's calculation should identify the relevant income, rates, reliefs and tax already accounted for. The older KRA guide describes recalculating the relevant year's liability with an allocated lump sum and crediting tax already paid. That helps explain why a percentage shown against a final payment is not necessarily a special “leave tax” rate.
Do not automatically apply today's relief or contribution settings to earlier years. Ask payroll to explain any NSSF, health contribution, Housing Levy or other deduction separately; being taxable for PAYE does not establish every other deduction's basis.
Keep a trail if the balance changes
- Save the leave statement and gross calculation.
- Obtain the final payslip and payment confirmation.
- Check the year-by-year tax schedule against your P9 records.
- Request corrected records if days, salary basis or tax change.
The payslip guide helps separate gross pay from deductions. If the exit package includes more than leave, use the terminal-dues guide to keep the components distinct.
Sources and review date
Published and reviewed on 29 October 2026. Historical guidance explains allocation; use the law and rates applicable to each payment and period.