Employees are set to earn more after the government adopted changes for tax proposals in the Finance Bill 2024.
Speaking to the presser of the Kenya Kwanza Parliamentary Group, Finance Chair Kuria Kimani noted that the government agreed to make the Social Health Insurance Fund (SHIF) deductions and the Housing Levy tax deductible.
He noted that the savings towards the National Social Security Fund (NSSF) would also be deductible.
The chair explained that the move would reduce the amount of taxable income significantly.
Therefore, going forward, the Pay as You Earn (PAYE) will be determined based on the gross salary minus the deductions for Housing Levy, SHIF and NSSF.
"Levies on the Housing Fund and Social Health Insurance Fund (SHIF) will become income tax deductible. This means the levies will not attract income tax, putting much more money in the pockets of employees," he stated.
According to the National Assembly Leader of Majority, Kimani Ichung'wah, the proposals will be tabled before Parliament today.
However, Members of Parliament will begin debate on the proposals starting on Wednesday, June 18.
Ichung'wah stated that the changes would be beneficial to employees given that they have been paying more money towards taxes amidst economic hardships.
"We are devoting more money back to people especially the employees who have been paying for the housing Levy. The housing levy alongside the SHIF and the NSSF has been proposed to be tax deductible," he stated.
Salaried Kenyans have been contributing 1.5 per cent of their gross income towards the Housing Levy. The levy is used to undertake affordable housing projects in the country.
On the other hand, employees will be paying 2.75 per cent of their gross income to the new health insurance coverage. SHIF will officially begin in July.
