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How Much is PAYE on Ksh300,000?

In Kenya, employees like Erick Kirui, a Logistics Manager earns a monthly salary of Ksh 300,000. He wants to know how much is PAYE on Ksh300,000. PAYE is a system where the government collects income tax throughout the year through your employer. Let’s break down Erick’s salary and see how much PAYE contributes to his net pay.

Breakdown of Erick’s Salary of KSh300,000:

Description Amount (Ksh)
Basic Pay 300,000.00
NSSF Contribution 2,160.00
Taxable Pay 297,840.00
Income Tax  
Insurance Relief 255.00
AHL Relief 675.00
Personal Relief 2,400.00
PAYE  
Net Pay After Tax 217,034.64
NHIF Contribution 1,700.00
Housing Levy 4,500.00
Final Net Pay 210,834.64

Basic Pay

Erick Kirui’s payslip clearly shows a basic pay of Ksh 300,000, representing his gross salary before any deductions are applied.

Mandatory Deductions

NSSF

Erick contributes Ksh 2,160 to his social security fund, which provides benefits like pensions after retirement.

NHIF

He also pays Ksh 1,700 for health insurance, ensuring he has access to medical services at NHIF-accredited facilities.

Calculating Taxable Pay

Since NSSF deductions are not considered taxable income, we subtract them from the basic pay to arrive at the taxable pay. For Erick:

  • Basic Pay: Ksh 300,000
  • NSSF Deduction: Ksh 2,160
  • Taxable Pay: Ksh 300,000 – Ksh 2,160 = Ksh 297,840

Income Tax Calculation

The KRA uses a tiered tax system. Based on his taxable pay, Erick falls under the 30% tax bracket. Thus, his income tax calculation is:

  • Income Tax: Ksh 297,840 x 30% = Ksh 89,352

Reliefs Reduce Tax Burden

Thankfully, the Kenyan tax system offers several reliefs to ease the burden on taxpayers. Erick’s payslip reflects the following deductions:

  • Insurance Relief: Ksh 255, due to his NHIF contributions
  • AHL Relief: Ksh 675
  • Personal Relief: Ksh 2,400 per month (Ksh 28,800 annually)

The total relief amounts to Ksh 255 + Ksh 675 + Ksh 2,400 = Ksh 3,330. Subtracting this relief from his initial income tax liability results in:

  • Final PAYE: Ksh 89,352 – Ksh 3,330 = Ksh 86,022

Calculating Net Pay

Now that we have determined the PAYE amount, we can calculate Erick’s net pay. From his gross salary, we deduct PAYE, mandatory contributions (NSSF & NHIF), and the newly introduced Housing Levy:

  • Basic Pay: Ksh 300,000
  • PAYE: Ksh 86,022
  • NSSF: Ksh 2,160
  • NHIF: Ksh 1,700
  • Housing Levy: Ksh 4,500
  • Net Pay: Ksh 300,000 – Ksh 86,022 – Ksh 2,160 – Ksh 1,700 – Ksh 4,500 = Ksh 210,834.64

Erick’s payslip thus reflects a net pay of Ksh 210,834.64, which is the amount he receives after all deductions.

Understanding Your Payslip

By understanding the breakdown of his payslip, Erick can appreciate how PAYE deductions contribute to the government’s tax revenue and various social programs. Moreover, the reliefs offered by the Kenyan tax system help lessen his tax burden. If you have any questions regarding your payslip or tax deductions, it’s advisable to consult with your employer’s HR department or a tax professional.

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