If you run payroll in Kenya, February 2026 changed your numbers again. The fourth phase of the NSSF Act, 2013 came into force, lifting contribution limits substantially. Combined with SHIF and the Affordable Housing Levy, statutory deductions now deserve a permanent line in your cash-flow planning. Here is the complete 2026 picture.
NSSF: Year 4 rates from February 2026
NSSF contributions remain 6% of pensionable pay from the employee, matched by 6% from the employer — but the earnings limits moved sharply upward in February 2026:
| 2025 (Year 3) | 2026 (Year 4) | |
|---|---|---|
| Lower earnings limit (Tier I) | KES 8,000 | KES 9,000 |
| Upper earnings limit (Tier II) | KES 72,000 | KES 108,000 |
| Maximum employee contribution | KES 4,320 | KES 6,480 |
| Maximum employer contribution | KES 4,320 | KES 6,480 |
For an employee earning KES 108,000 or more, the combined monthly remittance is now KES 12,960. Tier II contributions (on earnings between KES 9,000 and 108,000) may be contracted out to an approved private pension scheme — an option worth evaluating if you already run a scheme for staff.
The employer match is a real cost increase. For a 20-person team on decent salaries, Year 4 can add tens of thousands of shillings to monthly staff costs. Budget for it — it isn't optional.
SHIF: 2.75% of gross salary
The Social Health Insurance Fund (which replaced NHIF) takes 2.75% of each employee's gross salary, with a minimum contribution of KES 300 per month. There is no upper cap, so high earners contribute proportionally more. SHIF is an employee deduction — but the employer is responsible for deducting and remitting it.
Affordable Housing Levy: 1.5% + 1.5%
The Housing Levy remains 1.5% of gross salary deducted from the employee, matched by 1.5% from the employer. It applies to all employees regardless of income level.
PAYE: the 2026 bands
PAYE continues on the graduated scale, applied to taxable pay after allowable deductions:
| Monthly taxable pay | Rate |
|---|---|
| Up to KES 24,000 | 10% |
| KES 24,001 – 32,333 | 25% |
| KES 32,334 – 500,000 | 30% |
| KES 500,001 – 800,000 | 32.5% |
| Above KES 800,000 | 35% |
Personal relief remains KES 2,400 per month. Importantly, employee contributions to SHIF, NSSF and the Housing Levy are deductible in arriving at taxable pay — make sure your payroll software applies these correctly, or employees will be over-taxed.
One deadline to rule them all: the 9th
PAYE, SHIF, NSSF and the Housing Levy are all due by the 9th of the following month. Miss it and penalties accrue automatically — PAYE late payment alone attracts a 5% penalty plus 1% interest per month. Set a single internal payroll cut-off (we recommend the 5th) so every remittance clears before the deadline.
Payrolls still running 2025 NSSF limits after February 2026 — under-remitting without knowing it. NSSF arrears attract penalties, and the exposure compounds monthly. If you haven't updated your payroll parameters this year, check today.
What this means for your staffing costs
For every KES 100,000 gross salary, the true 2026 employer cost is roughly KES 107,500 once NSSF and the Housing Levy match are added — before any medical cover, leave or gratuity. Price your services and plan your hiring on the full loaded cost, not the gross salary.
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