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Kenya Tax Guide 2025
Everything you need to know to file your income tax return in Kenya for Tax Year 2025.
Updated March 2026Tax Year: 2025Filing Deadline: June 30, 2026
👤 Who Must File
You must file an IT1 Individual Income Tax Return if, in Tax Year 2025, you:
- Had employment income from any Kenyan employer (even if PAYE was deducted)
- Had self-employment, freelance, or consulting income
- Received rental income from property in Kenya
- Had business turnover exceeding KES 1 per year
- Received dividends, interest, or capital gains
- Are a registered taxpayer with a KRA PIN, regardless of income
⚠ Even if your employer deducted PAYE, you must still file an IT1 return. PAYE is an advance payment — the return reconciles your total liability.
📊 2025 Income Tax Brackets
| Annual Income Band | Rate | Tax on Band |
|---|---|---|
| First KES 288,000 | 10% | KES 28,800 |
| Next KES 100,000 (288K–388K) | 25% | KES 25,000 |
| Next KES 300,000 (388K–688K) | 30% | KES 90,000 |
| Next KES 300,000 (688K–988K) | 32.5% | KES 97,500 |
| Above KES 988,000 | 35% | 35% of excess |
Less: Personal Relief of KES 28,800/year (KES 2,400/month) applicable to all residents.
🛡️ Reliefs & Deductions
Personal Relief
All residents automatically
KES 28,800/yr
Insurance Premium Relief
15% of premiums, registered insurer
Max KES 60,000/yr
Pension / Provident Fund
Registered scheme contributions
Max KES 240,000/yr
Mortgage Interest Relief
Owner-occupied property only
Max KES 300,000/yr
💼 Income Types
Employment Income
Salaries, wages, allowances, benefits in kind from any employer. Reported via P9 form.
Self-Employment / Freelance
Consulting, gig work, professional fees. Deductible business expenses apply under Standard regime.
Rental Income (MRI)
Gross rent from residential or commercial property. Taxed at 7.5% on gross rent under Monthly Rental Income regime.
Business Income (TOT)
Annual turnover KES 1–25M. Taxed at 1.5% on gross turnover. No expense deductions allowed.
Capital Gains
Gains from sale of property or shares. CGT at 15% on net gain (selling price minus cost).
Dividends & Interest
Dividend withholding tax 15% (final). Interest withholding 15%. Usually filed separately.
🔄 Turnover Tax (TOT)
Turnover Tax is a simplified regime for small businesses and freelancers with annual turnover between KES 1 and KES 25 million. Rate: 1.5% on gross turnover.
Advantages
- Lower effective rate for most
- No expense record-keeping required
- Simple monthly/quarterly filing
Limitations
- No expense deductions allowed
- Not suitable if expenses >30% of revenue
- Cannot offset against employment income
⚠️ Penalties for Late / Non-Filing
Late filing penaltyKES 2,000/month OR 5% of tax due
Late payment interest1% per month on outstanding tax
Fraudulent returnUp to KES 10,000 + imprisonment