Payroll in Kenya

Payroll in Kenya means calculating gross-to-net salary, deducting NSSF pension, SHIF health and the Affordable Housing Levy from each employee, applying progressive PAYE income tax on what is left, paying the employer NSSF and housing levy on top, issuing payslips and filing the monthly PAYE return through iTax by the 9th of the following month. The key local issue changed recently: under the Tax Laws (Amendment) Act 2024, NSSF, SHIF and the housing levy now come off gross pay before income tax is worked out, so the order of the calculation matters more than it used to.

Total employer cost for a KSh 100,000 monthly salary is about KSh 107,500, around 8% on top of gross.

Our verdict: From your first hire in Kenya, opening a Ltd (roughly $1,500 to $4,000 in setup costs and 4 to 8 weeks to complete) can work out cheaper than an EOR at $199 to $650 per employee per month. Use an EOR only when you need someone working before the entity is ready. Already running a local entity: standard payroll outsourcing is the cheaper route.

Use this page if you already have, or plan to set up, a local entity in Kenya and want to know what running payroll actually involves. If you want to hire in Kenya without becoming the legal employer, an Employer of Record is the faster route.

No local entity yet? See our guide to EOR in Kenya.

Payroll in Kenya at a Glance

How Does Payroll Work in Kenya?

Kenyan payroll runs on a steady monthly rhythm. You calculate each employee’s gross salary, strip out their statutory deductions and income tax to reach net pay, add the employer charges on top, then report the whole run to the tax authority and pay what is owed by a single monthly deadline.

That tax authority is the Kenya Revenue Authority, or KRA. It is the body that collects income tax and the statutory levies, and that audits employers when the numbers do not line up. Almost everything in Kenyan payroll eventually reports to the KRA.

The income tax sits inside a system called PAYE, short for Pay As You Earn. PAYE means you deduct the right income tax from each payslip as you go, rather than the employee settling a bill at year end. You file and pay it through iTax, the KRA’s online portal for returns and payments.

Three statutory deductions come off the employee before tax is even calculated. NSSF is the National Social Security Fund, the state pension scheme, at 6% of pensionable pay. SHIF is the Social Health Insurance Fund, the national health contribution at 2.75% of gross that replaced the old NHIF from October 2024.

The third is the Affordable Housing Levy, or AHL, at 1.5% of gross pay, which funds the government’s housing programme. The order is the part that changed recently. Under the Tax Laws (Amendment) Act 2024, NSSF, SHIF and AHL are all subtracted from gross before the PAYE bands apply, rather than being treated as 15% tax reliefs as they once were.

Get the order or the rates wrong and two things break at once: the employee’s take-home pay is incorrect, and your monthly PAYE return no longer reconciles. That single sequencing rule is the heart of compliant Kenyan payroll.

What Payroll Taxes Apply in Kenya?

Four charges sit on every Kenyan salary: the employer’s NSSF and housing levy, the employee’s NSSF, SHIF and AHL deductions, and income tax collected through PAYE. They are calculated in a fixed order, and that order is what makes the gross-to-net result.

Employer Payroll Contributions in Kenya

The employer pays two statutory charges on top of gross salary. The first is NSSF, where you match the employee’s 6% pension contribution up to the same cap, so a maximum of KSh 6,480 per employee per month. The second is the Affordable Housing Levy at 1.5% of gross, which the employer pays alongside the employee’s matching 1.5%.

Together these come to roughly 7.5% of gross at lower salaries, falling as a share once pay rises above the NSSF cap. Note that SHIF is employee-only, so there is no matching employer health charge.

This is a light employer burden by international standards, which keeps the total cost of a hire close to the gross salary. The trade-off is on the employee side, where three separate deductions stack up before tax.

The true cost of employing in Kenya

Statutory employer rates; items can apply to different wage bases or carry conditions, so lines do not always sum to the total.

Kenya has no statutory 13th-month, holiday or profit-sharing bonus.

Sources: taxsummaries.pwc.com (employer contributions), new.kenyalaw.org (bonuses).

Employee Payroll Deductions in Kenya

You withhold three statutory deductions from the employee before income tax. NSSF is 6% of pensionable pay, but capped: the upper earnings limit is KSh 108,000 a month, so the employee deduction maxes out at KSh 6,480. SHIF is 2.75% of gross with no cap, and AHL is 1.5% of gross, also uncapped.

The cap matters for higher earners. Because NSSF stops at KSh 6,480 while SHIF and AHL keep scaling with pay, the combined deduction rate of 10.25% only holds at lower salaries and falls as gross rises above the NSSF ceiling.

These are the employee’s deductions, but you are responsible for calculating, withholding and remitting them. If your provider miscalculates any of the three, the employee’s net pay is wrong and your PAYE return will not reconcile against what you paid into the funds.

Income Tax on Salary in Kenya

Income tax is collected through PAYE on a progressive scale, running from 10% on the first band up to 35% at the top. The base is gross pay after NSSF, SHIF and AHL have been deducted, not the full gross, which is the change the 2024 Act brought in.

One detail does most of the work at the end of the calculation. Personal relief is a flat KSh 2,400 per month that is subtracted from the computed tax itself, not from taxable income. So you work out the PAYE on the bands first, then knock KSh 2,400 off the result.

Payroll Tax Example: Gross Salary to Net Pay

Here is how the charges stack up for a representative salary. The figures come from the contribution and tax rates above, calculated in the statutory order.

Simplified illustration: From February 2026 (NSSF Phase 4) gross KSh 100,000/month sits below the new KSh 108,000 upper earnings limit, so NSSF is 6% of full pay: Tier I 540 (on the first 9,000) + Tier II 5,460 = KSh 6,000 each for employee and employer. NSSF, SHIF and AHL are deducted from gross before PAYE bands apply, per the Tax Laws (Amendment) Act 2024 (PAYE: 2,400 + 2,083.25 + 17,225.10 – 2,400 relief = 19,308); the flat NITA levy of KSh 50/employee is excluded. A flat KES 2,400 per month is subtracted from the calculated PAYE, not from taxable income.

Read the two bold rows together. A worker on KSh 100,000 gross takes home KSh 70,442, while your total cost as employer is KSh 107,500.

The gap on the employee side comes from three deductions stacked before tax; the gap between gross and your cost is the light 7.5% employer loading. That is the Kenyan payroll signature: budget close to gross, but negotiate offers in net terms because the employee deductions bite.

What Payroll Filings Are Required in Kenya?

Kenya consolidates monthly payroll reporting into a single PAYE return rather than splitting tax and contributions across several forms. The filing is the monthly PAYE return, known as the P10, and it is the centre of your compliance month.

What the Monthly PAYE Return Reports

The P10 is the monthly PAYE return that every Kenyan employer files with the KRA through iTax. In one submission it reports each employee’s pay, the NSSF, SHIF and AHL deductions, and the income tax withheld for the whole workforce.

Because it is unified, it has to reconcile with your payroll run and the payments you make to the KRA and the relevant funds. The KRA cross-checks these, and a mismatch is a common trigger for a payroll query.

When the PAYE Return Is Due

The P10 is due by the 9th of the month following the reporting month. Pay for May is declared and the related tax and contributions paid by 9 June. The filing deadline and the payment deadline fall on the same date, so your provider needs the run finalised with enough margin to both submit the return and settle the amounts.

Who Files It

The legal obligation sits with the employer. In practice, your payroll provider prepares and submits the P10 on your behalf through iTax, or your in-house team files it directly if you run your own Kenyan payroll.

Either way, confirm in writing who presses submit each month. The liability for a late or wrong filing stays with you as employer regardless of who does the keying.

What Happens If Payroll Filings Are Wrong

Late PAYE filing draws the higher of KSh 20,000 or 5% of the tax due, with a further 5% penalty plus 1% monthly interest on late payment. Late NSSF carries a 5% monthly penalty, and the health-fund penalty has historically run to the full value of the contribution. Beyond the money, a return that does not reconcile invites scrutiny of the whole payroll, which is why getting NSSF, SHIF, AHL and tax right the first time matters more than the headline fine suggests.

What Are the Payroll Deadlines in Kenya?

Most Kenyan payroll obligations land monthly, anchored to that 9th-of-the-following-month filing and payment date. The exception is KRA PIN registration, which is event-driven: each new hire needs a tax number before they start, not at month end.

Late filing: PAYE: Higher of KES 20,000 or 5% of tax due for late filing; 5% penalty plus 1% monthly interest for late payment. NSSF: 5% monthly. NHIF: 100% of contribution.

Payroll Operations Risk in Kenya

Employers in Kenya file with 3 separate agencies.

Sources: labour.go.ke (compliance), centralbank.go.ke (payments).

What Payslip and KRA PIN Rules Apply in Kenya?

Kenya does not run a separate central payroll register the way some countries do. Instead, each employee must hold a KRA PIN, the personal tax number issued by the Kenya Revenue Authority, and your payroll reports against those numbers every month.

The timing rule is the one that catches foreign employers. A new hire needs their KRA PIN in place before their start date, because you cannot run them through PAYE without it.

On payslips, Kenya requires you to issue one to every employee for each pay run, showing gross pay, each deduction and net pay. Your payroll provider should produce compliant payslips automatically from the same figures that feed the PAYE return. When you assess a provider, confirm the payslip shows NSSF, SHIF, AHL and PAYE as separate lines, and that PIN registration is handled before onboarding rather than scrambled at month end.

How Much Does Payroll Outsourcing Cost in Kenya?

There are two separate numbers in Kenyan payroll cost, and confusing them is the most common budgeting mistake. The first is your statutory employer cost, which is the employer NSSF match plus the 1.5% housing levy, roughly 7.5% of gross at lower salaries.

12 of the 16 EOR providers we track publish Kenya fees; they range from $199 to $650 per employee per month.

Published list prices in USD: EOR fees are per employee per month, contractor fees per contractor per month. Providers that publish neither fee for Kenya are not shown.

According to Whichapp’s July 2026 analysis of EOR fees across 40 countries, providers charge $199 to $650 per employee per month in Kenya.

12 of the 16 providers we track publish Kenya EOR fees. The lowest published rate is $199 per employee per month and the highest is $650.

Contractor management fees in Kenya run from $6 to $49 per contractor per month.

The second is the fee you pay a provider to run the payroll for you. They are unrelated, and only the second is negotiable.

Managed Payroll Provider Fees

Managed payroll in Kenya is normally priced per employee per month, and most providers quote rather than publish a rate. The price turns on headcount, on whether you also need accounting or HR support, and on complexity such as variable pay, benefits in kind or a mix of resident and non-resident staff.

The fee buys the calculation, the P10 filing through iTax, KRA PIN handling and payslip production. It does not include the statutory deductions and levies themselves, which you fund on top, so gather two or three quotes before committing.

What Payroll Provider Fees Usually Include

A standard managed payroll fee in Kenya should cover the monthly gross-to-net calculation, deduction of NSSF, SHIF and AHL, the PAYE calculation including personal relief, preparation and submission of the P10 through iTax, KRA PIN registration and monthly payslips. Ask for that list in writing. If any of it sits outside the headline fee, you want to know before the first run, not after.

Extra Payroll Costs to Ask About

The gaps tend to appear at the edges of the standard cycle. Ask specifically about year-end reconciliation, benefits-in-kind valuation, handling of the NSSF cap for higher earners, termination and severance calculations, correction filings when something has to be restated, and onboarding setup fees for taking on your payroll. These are the line items that turn a tidy per-head quote into a larger annual number.

When Payroll Outsourcing Becomes Cheaper Than EOR

The choice between running your own payroll and using an EOR is mostly about headcount and how long you plan to stay. An EOR carries a higher monthly fee per person because the provider is the legal employer and absorbs the entity, but it saves you setting one up.

Running your own payroll through a Kenyan entity is cheaper per head once you are past a handful of employees and committed to staying, because the entity and provider fee spread across more people. In our assessment, the more people you hire and the longer the horizon, the more the economics favour your own entity with outsourced payroll.

Payroll in Kenya vs EOR in Kenya

The line between the two routes is simple: standard payroll assumes you are the legal employer through a Kenyan entity, while an EOR makes the provider the legal employer so you do not need one.

Use payroll outsourcing if you already have a local entity or are hiring enough people to justify one. Use an EOR if you need to hire before setting up an entity.

If that second case is you, our guide to EOR in Kenya covers the providers, licensing and costs in full. EOR pricing and provider ranking live there, not on this page.

Best Payroll Providers for Kenya

These providers all run payroll in Kenya, but they are built for different situations. Below is where each one fits and the local point to check before you sign. We do not list EOR prices here; for unpriced managed payroll, treat the fee as by quote and confirm it during your shortlist calls.

3 providers in Whichapp’s independent index cover Kenya. The top 3 by composite score:

1. Deel (9.1/10). From $599/month. Best for scale, automation and contractor volume. Runs its own Kenya entity.
2. Remote (8.0/10). From $599/month. Best for IP protection and owned-entity purity. Runs its own Kenya entity.
3. Rippling (6.4/10). Best for unified IT, HR, and global finance. Serves Kenya through a partner.

Rankings come straight from Whichapp’s provider index (coverage 30%, pricing transparency 25%, security and compliance 25%, integration depth 20%); see how we score.

Only 2 of 3 major EORs run their own Kenya entity; 1 more serves it via a partner.

Entity model as reported on provider websites, last checked 2026-06-06. An own entity means the provider is the direct legal employer; a partner model adds a third party to the chain.

Deel for Payroll in Kenya

Deel is a strong fit if Kenya sits alongside other African or international hires you want on one platform, with a single dashboard and API across markets. Kenya watch-out: confirm whether your Kenyan payroll runs on Deel’s own local entity or a partner bureau, and that it files the P10 through iTax directly rather than handing it to a third party. Read our Deel review.

Remote for Payroll in Kenya

Remote runs much of its payroll through owned entities, which gives a cleaner compliance chain than a partner-network model. That suits employers who want a direct line of accountability for the PAYE return and the NSSF, SHIF and AHL payments.

Kenya watch-out: confirm Kenyan payroll is on Remote’s own entity rather than a local partner, and that the platform applies NSSF, SHIF and AHL as gross deductions before PAYE under the 2024 rules. Read our Remote review.

Papaya Global for Payroll in Kenya

Papaya Global is built for consolidating payroll across many countries with finance-grade reporting and audit trails, so it earns its place when Kenya is one market in a larger stack. Its weakness is the opposite case: for a single Kenyan entity with no multi-country reporting need, the platform is heavier than the job requires.

Kenya watch-out: Papaya leans on local partners in some markets, so confirm whether your Kenyan payroll runs on its own engine or a third-party bureau, and how directly it owns the P10 filing. Read our Papaya Global review.

Rippling for Payroll in Kenya

Rippling appeals when you want payroll wired into the same system as HR, IT and device management, with automated journal entries. Kenya watch-out: it is platform-first, so confirm the depth of its Kenyan statutory handling, specifically the NSSF cap, SHIF, AHL and PAYE personal relief, against what a local specialist would offer. Read our Rippling review.

Multiplier for Payroll in Kenya

Multiplier is the value option for multi-country payroll where price predictability matters, which fits smaller Kenyan teams. The trade-off for that price is depth: in tightly regulated markets it tends to carry less local specialist weight than an in-country bureau.

Kenya watch-out: confirm it files the P10 through iTax and handles KRA PIN registration directly rather than through a reseller, and that its gross-to-net engine models the 2024 deduction order and the NSSF cap accurately before you anchor any salary offers on it. Read our Multiplier review.

Safeguard Global for Payroll in Kenya

Safeguard Global is a payroll-led specialist rather than an HR platform with payroll bolted on, which appeals when running the payroll correctly is the whole point and you do not need a wider people stack. That focus is also its limit: if you want integrated HR, devices and onboarding in one tool, it does less than Rippling or Deel.

Kenya watch-out: confirm its Kenyan coverage is run in-house rather than subcontracted, and that the service includes the SHIF transition from the old NHIF and KRA correspondence, not just the monthly calculation. Read our Safeguard Global review.

How to Choose a Payroll Provider in Kenya

The questions below separate a provider that genuinely runs Kenyan payroll from one that resells a local bureau without owning the detail. Ask them before you sign, not after the first run.

Can They File the Monthly PAYE Return via iTax?

Confirm the provider prepares and submits the P10 to the KRA directly through iTax, and that it reconciles the return against the actual payroll and bank payments each month. Ask who presses submit and by when.

Do They Apply the 2024 Deduction Order Correctly?

Check that the provider deducts NSSF, SHIF and AHL from gross before applying the PAYE bands, in line with the Tax Laws (Amendment) Act 2024, rather than treating them as the old 15% reliefs. A provider still on the old method will overstate tax and understate net pay.

Can They Model Gross-to-Net Salary Accurately?

Kenya’s three stacked employee deductions and the NSSF cap mean a net-pay request translates into a specific gross that shifts above the NSSF ceiling. A capable provider models gross-to-net both ways, including personal relief, and helps you frame offers rather than just processing whatever number you hand over.

How Do They Update for Payroll Law Changes?

Kenyan payroll has changed fast, with SHIF replacing NHIF in 2024 and the housing levy and deduction order both recently introduced. Ask how the provider tracks KRA and statutory changes and how quickly updates reach your payroll runs.

Who Is Liable for Payroll Errors?

The statutory liability stays with you as employer, but the contract should set out what the provider is accountable for if a miscalculation or late filing is their fault. Get the indemnity and correction process in writing.

Can They Support Multi-Country Reporting?

If Kenya is one of several markets, confirm the provider can consolidate reporting across them in a single view, so your finance team is not stitching country files together by hand.

What Support Do They Offer During Terminations or Audits?

Terminations and KRA queries are where weak providers show their limits. Ask what support you get during a termination calculation or an audit, and whether a named contact handles it or you are routed through a ticket queue.

What Does Terminating an Employee Cost in Kenya?

Severance: An employer must pay a redundant employee severance pay at the rate of not less than fifteen (15) days’ wages for each completed year of service.

Statutory leave: 21 working days of paid annual leave plus 12 public holidays a year.

Sources: kenyalaw.org (severance), new.kenyalaw.org (notice periods).

Kenya Payroll Checklist Before Hiring

• Confirm whether you need payroll or an EOR
• Check your local entity status
• Model gross-to-net salary for your offers
• Confirm employer contribution rate (employer NSSF + AHL)
• Confirm employee deductions (NSSF, SHIF, AHL)
• Confirm income tax treatment
• Check who files Monthly PAYE (P10) via iTax and by when
• Confirm KRA PIN registration is handled
• Confirm the payslip process
• Check leave, sick pay and termination workflows
• Ask who carries liability for calculation errors
• Confirm provider pricing and any extra fees

Work through this before your first hire. The deduction order at point six is the one foreign employers get wrong most often, because NSSF, SHIF and AHL now come off gross before PAYE rather than acting as tax reliefs.

FAQs About Payroll in Kenya

Methodology and Disclosure

The NSSF, SHIF and Affordable Housing Levy rates, the PAYE bands, personal relief, filing deadlines and penalty figures on this page come from Whichapp’s Kenya statutory dataset, grounded in Kenya Revenue Authority PAYE rules and the Tax Laws (Amendment) Act 2024, and refreshed as rates change. The worked example is calculated from those rates and reconciles by construction.

Provider assessments reflect our independent editorial view of payroll fit for Kenya; we do not sell payroll, EOR or contractor services. Some provider links may carry affiliate referrals, which never affects our editorial judgement or the figures above.

Already hiring contractors instead of employees? See contractor management in Kenya, or start from the Kenya hiring hub for the full picture.

Primary sources

• Income tax and employee contributions: taxsummaries.pwc.com
• Employer contributions: assets.kpmg.com
• Minimum wage: kenyalaw.org
• Payroll filing deadlines: kenyalaw.org:8181
• Notice periods and leave: new.kenyalaw.org
• Severance rules: kenyalaw.org
• Entity setup benchmark: brs.go.ke