Government Scraps Personal Tax Relief For Teachers & Civil Servants
The government has introduced measures that may lead to the elimination of personal relief for salaried individuals, starting from the upcoming fiscal year. This proposal is a part of the Kenya Kwanza government’s draft medium-term revenue strategy for the financial periods of 2024–2025 and 2026–2027.
The government has announced its intention to evaluate tax reliefs, considering the removal of those that prove ineffective, as outlined in the draft recommendations released by the Treasury.
Presently, taxpayers enjoy various forms of relief, including personal, insurance, medical, housing, and disability-related benefits, as the government endeavors to foster a savings culture, promote insurance policy adoption, encourage home ownership, and alleviate the tax burden on Kenyan citizens.
The Treasury also notes that tax incentives can complicate the tax system and diminish its effectiveness as a tool for promoting equity. Furthermore, research suggests that tax breaks may not significantly influence taxpayers’ behavior regarding savings or mortgage-related activities.
Also Read: National Treasury Now Targets Educational Institutions with Six Taxes
Individuals earning less than Sh24,000 per month (equivalent to Sh288,000 per year) remain exempt from income tax. The Income Tax Act establishes five tax brackets for personal income:
1. For incomes ranging from Sh0 to Sh288,000 per year, a 10% tax rate applies.
2. In the next bracket of up to Sh100,000 per year, a 25% tax rate is enforced.
3. The subsequent bracket, encompassing up to Sh5,612,000 per year, is subject to a 30% tax rate.
4. Earnings of up to Sh3,600,000 per year in the following bracket incur a 32.5% tax rate.
5. Incomes exceeding Sh9,600,000 per year are taxed at a rate of 35%.
The Treasury has emphasized that the Medium-Term Revenue Strategy seeks to bolster domestic revenue, which has been on a declining trend in recent times.
Government Scraps Personal Tax Relief For Teachers & Civil Servants
