Charity Mueni, a recent graduate, is excited about her new job offer in Nairobi. However, like many newcomers to the workforce, she’s curious about how much of her salary will be deducted for taxes. Specifically, she’s interested in understanding the PAYE deductions on her monthly salary of Ksh40,000.
Demystifying Your Payslip Breakdown
Here’s a breakdown of Mary’s payslip, explaining each component:
| Description | Amount (KES) | Explanation |
|---|---|---|
| Basic Pay | 40,000.00 | This is your total salary before any deductions. |
| NSSF Contribution (National Social Security Fund) | -2,160.00 | This mandatory contribution goes towards your retirement benefits. |
| Taxable Pay | 37,840.00 | This is your basic pay minus NSSF, used to calculate income tax. |
| Income Tax | -6,135.36 | This is the estimated tax payable to KRA based on your taxable income. |
| Tax Reliefs | These deductions reduce your tax liability: | |
| – Insurance Relief (15% of NHIF) | +150.00 | Reduces tax by 15% of your monthly NHIF contribution. |
| – AHL Relief (15% of Housing Levy) | +90.00 | Reduces tax by 15% of your monthly Housing Levy contribution. |
| – Personal Relief | +2,400.00 | Basic tax-free amount provided by the government. |
| Total Tax Reliefs | +2,640.00 | Total tax reliefs deducted from your income tax. |
| PAYE (Tax Payable) | -3,495.36 | This is your income tax minus tax reliefs (the remaining tax to be paid). |
| Net Pay | 34,344.64 | This is your take-home pay after tax deductions (NSSF, PAYE). |
| NHIF Contribution (National Hospital Insurance Fund) | -1,000.00 | This mandatory contribution provides you with access to healthcare services. |
| Housing Levy (Affordable Housing Development Levy) | -600.00 | This mandatory contribution goes towards affordable housing initiatives. |
| Total Deductions | -6,760.00 | Sum of all deductions from your gross pay (NSSF, NHIF, PAYE, Housing Levy) |
| Net Pay | 32,744.64 | This is your final take-home pay after all deductions. |
Key Takeaways
Understanding your payslip breakdown is crucial for effective financial management. Knowing how much goes towards taxes and contributions allows you to plan your budget and reach your financial goals.
Additional Tips
- This is a simplified example, and your actual deductions may vary based on your individual circumstances. You can use the KRA PAYE Calculator to estimate your monthly PAYE deductions.