In this article we are going to answer the question How much is Paye for Ksh,250,000.PAYE is a crucial part of Kenya’s tax system, ensuring employees contribute their fair share of taxes directly from their salaries. Follow along in calculating PAYE for Ksh,250,000. Let’s explore the PAYE system using the example of Fatma Maalim, an engineer earning Ksh. 250,000 per month. This will illustrate how various deductions and reliefs are applied to determine the net pay.
Breakdown of Fatma’s Salary:
| Description | Amount (Ksh) | Explanation |
|---|---|---|
| Basic Salary | 250,000 | This is Fatma’s gross pay before deductions. |
| NSSF Contribution (National Social Security Fund) | 2,160 | This is a mandatory social security contribution. |
| Taxable Pay | 247,840 | Basic Salary – NSSF Contribution |
| Income Tax | 69,135.36 | Calculated based on taxable income using KRA tax rates |
| Total Reliefs | 3,217.50 | This includes Insurance Relief, AHL Relief, and Personal Relief |
| PAYE | 65,917.86 | Income Tax – Total Reliefs |
| Pay After Tax | 181,922.14 | Taxable Pay – PAYE |
| NHIF Contribution (National Hospital Insurance Fund) | 1,700 | This is a mandatory health insurance contribution. |
| Housing Levy | 3,750 | This is a contribution towards affordable housing initiatives. |
| Net Pay | 176,472.14 | Pay After Taxes |
Basic Salary and Initial Deductions
Fatma’s basic salary is Ksh250,000. The first deduction from this amount is for the NSSF, which is Ksh. 2,160.
Calculating Taxable Pay
After deducting the NSSF contribution, we get Fatma’s taxable pay:
Taxable Pay = Basic Pay – NSSF
Taxable Pay = 250,000 – 2,160
Taxable Pay = 247,840
Income Tax Calculation
Next, we calculate the income tax based on the taxable pay. For Fatma, the income tax due is Ksh. 69,135.36.
Applying Tax Reliefs
Kenya’s tax system offers several reliefs to reduce the overall tax burden. For Fatma, the following reliefs apply:
- Insurance Relief: Ksh. 255.00
- AHL Relief: Ksh. 562.50
- Personal Relief: Ksh. 2,400.00
We subtract these reliefs from the total income tax to determine the PAYE:
Total Reliefs = Insurance Relief + AHL Relief + Personal Relief
Total Reliefs = 255 + 562.50 + 2,400
Total Reliefs = 3,217.50
PAYE = Income Tax – Total Reliefs
PAYE = 69,135.36 – 3,217.50
PAYE = 65,917.86
Determining Pay After Tax
To find Fatma’s pay after tax, we subtract the PAYE from the taxable pay:
Pay After Tax = Taxable Pay – PAYE
Pay After Tax = 247,840 – 65,917.86
Pay After Tax = 181,922.14
Additional Deductions
There are also additional statutory deductions, including:
- NHIF: Ksh. 1,700.00
- Housing Levy: Ksh. 3,750.00
We subtract these from the pay after tax to determine the net pay:
Net Pay = Pay After Tax – NHIF – Housing Levy
Net Pay = 181,922.14 – 1,700 – 3,750
Net Pay = 176,472.14
Summary
In summary, here are Fatma’s payroll deductions and net pay:
- Basic Pay: Ksh. 250,000.00
- NSSF: Ksh. 2,160.00
- Taxable Pay: Ksh. 247,840.00
- Income Tax: Ksh. 69,135.36
- Insurance Relief: Ksh. 255.00
- AHL Relief: Ksh. 562.50
- Personal Relief: Ksh. 2,400.00
- PAYE: Ksh. 65,917.86
- Pay After Tax: Ksh. 181,922.14
- NHIF: Ksh. 1,700.00
- Housing Levy: Ksh. 3,750.00
- Net Pay: Ksh. 176,472.14
Understanding how PAYE and other deductions work is essential for employees to manage their finances effectively. This example clearly shows how statutory contributions and tax reliefs interact to determine the final take-home pay.