Ruto Proposes PAYE Tax Exemption for Workers Earning KSh32,800 and Below

President William Ruto has proposed exempting workers earning up to KSh32,333 a month from Pay As You Earn (PAYE) tax as part of a new package of measures targeting workers, farmers, land buyers and mobile phone users.

The President announced the proposals during this year’s Mashujaa Day celebrations in Eldoret, outlining plans to reduce the cost of acquiring land, lower smartphone prices and increase earnings for dairy farmers. The measures are intended to ease household financial pressure and improve access to essential goods and economic opportunities.

Under the proposed tax changes, employees earning KSh32,333 or less per month would no longer pay PAYE, allowing them to retain more of their salaries. The government expects the exemption to increase disposable income among lower-income workers and help households meet expenses such as food, transport and education.

The proposal must undergo the necessary legislative and policy processes before it can take effect. If approved, it would provide direct tax relief to a significant number of low-income earners.

The government also plans to exempt land transactions valued at KSh1 million or less from stamp duty. According to proposals developed by the National Treasury, transactions above that threshold would be subject to a progressive tax structure.

The exemption is intended to reduce the cost of buying land, particularly for first-time buyers and lower-income households. Under the current system, stamp duty can add tens of thousands of shillings to the cost of purchasing property, increasing the amount buyers need to raise before completing a transaction.

Ruto also announced plans to remove the recently introduced 25 per cent import duty on mobile phones. He said reducing the tax would make smartphones more affordable and help more Kenyans access digital services.

Lower smartphone prices could benefit young people who depend on mobile devices for education, business and employment opportunities. The proposal forms part of the government's wider effort to expand digital access while reducing costs for consumers.

Alongside the measures targeting workers and consumers, the President announced changes affecting the dairy sector, saying farmers would receive KSh65 per litre of milk, together with a quarterly bonus of KSh2 per litre. Ruto said the farm-gate price of milk had increased from KSh35 per litre in recent years, attributing the improvement to government efforts to increase farmers' earnings.

The announcement comes as Kenya's dairy sector faces supply challenges that have affected households, hotels and retail outlets. Milk shortages have contributed to higher consumer prices, raising concerns about the balance between farmers' earnings and the cost of milk for consumers.

Data from the Kenya National Bureau of Statistics indicates that fresh milk production reached a record level in 2025, continuing a trend of growth over several years. Industrial milk processors also recorded a significant increase in the volume of milk they received, indicating greater activity in the formal dairy sector.

Despite the growth in production, farmers continue to face rising feed and other production costs, which affect their earnings. At the same time, higher retail prices place additional pressure on households. The government therefore faces the challenge of improving returns to producers while keeping milk affordable for consumers.

To address supply and distribution challenges, Ruto has outlined plans to decentralise operations at the New Kenya Cooperative Creameries. Under the proposed changes, regional factories would operate more independently and supply nearby markets directly.

The government expects the changes to reduce transport costs, improve distribution and help stabilise milk supplies. Ruto also pledged to pay approximately KSh400 million owed to dairy farmers before the end of the month.