Statutory deductions in Kenya: SHIF, Housing Levy, NSSF and NITA

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Statutory deductions in Kenya are the amounts the law requires employers to deduct from salaries, and in several cases to match from their own funds: SHIF for health insurance, the Affordable Housing Levy, NSSF pension contributions, and PAYE income tax, plus the employer-only NITA levy. Several of these changed recently, with SHIF replacing NHIF, the Housing Levy becoming tax-deductible and NSSF limits rising each February. This guide explains each one, who pays, how it is calculated, deadlines, and a complete example.

The full list at a glance

• PAYE: income tax, deducted from the employee.
• SHIF: 2.75% of gross pay, deducted from the employee (minimum KES 300).
• Affordable Housing Levy: 1.5% of gross pay from the employee, and 1.5% from the employer.
• NSSF: 6% of pensionable pay from the employee and 6% from the employer, up to the upper earnings limit.
• NITA: KES 50 per employee per month, paid by the employer only.

Since December 2024, the employee's SHIF, Housing Levy and NSSF are deducted before PAYE is calculated. This guide covers the four contributions in detail; for the tax itself, see PAYE in Kenya.

SHIF: the Social Health Insurance Fund

SHIF replaced the National Hospital Insurance Fund (NHIF) in October 2024 under the Social Health Insurance Act, 2023, and is administered by the Social Health Authority (SHA). For salaried employees, the contribution is 2.75% of gross household income from employment, with a minimum of KES 300 a month. There is no upper cap, so higher earners pay more than under NHIF's old fixed bands.

The employer deducts SHIF from the employee's pay and remits it to SHA. There is no employer matching contribution. SHIF contributions are deductible before PAYE is calculated. Employees need to be registered with SHA; employers should check that each employee's registration is in place.

The Affordable Housing Levy

The Affordable Housing Levy, introduced under the Affordable Housing Act, 2024, is 1.5% of an employee's gross monthly salary, deducted from the employee, with a matching 1.5% paid by the employer. It funds the government's affordable housing programme.

The levy is collected by KRA and is due by the ninth working day after the end of the month in which the salary was paid. Since December 2024, the employee's share is deducted before PAYE, replacing the earlier affordable housing relief. The employer's share is a business expense.

NSSF: tiers and limits

Under the NSSF Act, 2013, both employee and employer contribute 6% of pensionable pay, split into two tiers:

• Tier I: 6% of pay up to the lower earnings limit, currently KES 9,000.
• Tier II: 6% of pay between the lower and upper earnings limits, the upper limit currently being KES 108,000.

So the maximum monthly contribution from each side is 6% of KES 108,000, which is KES 6,480. The limits have risen in phases each February since 2023 as the Act was implemented; the current figures took effect in February 2026. Employers with a registered occupational pension scheme may be able to contract out of Tier II in certain cases. Employee NSSF contributions are deductible before PAYE.

NITA: the industrial training levy

The National Industrial Training Authority (NITA) levy is KES 50 per employee per month, paid only by the employer. It funds industrial training. It is small, but easy to forget in cost estimates and filings. Employers register with NITA and remit the levy monthly.

Who pays what: employee and employer shares

For an employee earning KES 100,000 a month:

• Employee pays: SHIF KES 2,750, Housing Levy KES 1,500, NSSF KES 6,000, plus PAYE.
• Employer pays: Housing Levy KES 1,500, NSSF KES 6,000 and NITA KES 50, a total of KES 7,550 on top of salary.

The employer's total cost for this employee is therefore KES 107,550 a month before any voluntary benefits. Use the Kenya PAYE calculator to see all deductions for any salary.

A complete payslip example

For a gross salary of KES 100,000 with no other benefits:

1. Gross pay: KES 100,000.
2. SHIF (2.75%): KES 2,750.
3. Housing Levy (1.5%): KES 1,500.
4. NSSF (6% up to KES 108,000): KES 6,000.
5. Taxable pay: KES 89,750.
6. Tax on bands: KES 21,708.35; less personal relief KES 2,400; PAYE KES 19,308.35.
7. Total deductions: KES 29,558.35.
8. Net pay: KES 70,441.65.

The payslip should show each deduction separately, along with the employer's contributions if your payslip format includes them.

Deadlines

• PAYE: paid and filed by the ninth day of the following month.
• Housing Levy: by the ninth working day after the end of the month.
• SHIF: by the ninth day of the following month.
• NSSF: by the ninth day of the following month.
• NITA: monthly, by the ninth day of the following month.

Deadlines are set in each law and can change, so confirm them with each agency or your payroll provider. Late remittances attract penalties, sometimes calculated as a percentage of the unpaid amount per month.

How the rules changed recently

Kenya's payroll rules changed several times between 2023 and 2026:

• 2023: new PAYE bands at 32.5% and 35% for higher earners, and the start of phased NSSF increases.
• 2024: the Housing Levy was placed on a new legal footing under the Affordable Housing Act; SHIF replaced NHIF from October.
• December 2024: SHIF, the Housing Levy and NSSF became deductible before PAYE, replacing earlier reliefs.
• February 2025 and 2026: NSSF earnings limits rose again.

If your payroll process or spreadsheet was set up before these changes, check it carefully. Many errors come from outdated formulas.

Voluntary deductions

Payslips often include voluntary deductions too: contributions to a company pension scheme, SACCO savings and loan repayments, insurance premiums, union dues and salary advances. These require the employee's written authorisation. The Employment Act limits total deductions so that employees receive at least a minimum share of their wages, so check the total when adding loans or advances.

Statutory deductions for casual and part-time workers

Casual and part-time employees are generally subject to the same statutory deductions on what they earn, calculated on their actual pay for the period. SHIF has a monthly minimum, and NSSF applies on pensionable pay. Keep accurate records of hours and pay for casual staff. Genuinely independent contractors are not subject to these payroll deductions, though withholding tax may apply to some payments; see contractor misclassification if you are unsure.

Automating deductions with payroll software

Payroll software keeps rates, limits and tax bands current, calculates every deduction automatically, produces payslips and generates the files needed for KRA, SHA, NSSF and NITA. That saves time and avoids the most common errors. Compare options in the Kenya payroll software ranking and the Kenya payroll software guide.

Pair payroll with accounting software so that employer contributions are recorded correctly; see accounting software in Kenya and Zoho Books pricing in Kenya.

Employing in Kenya from abroad

If your company is outside Kenya and you hire a Kenyan employee without a local entity, an employer of record registers with each agency, calculates and remits all statutory deductions, and gives the employee payslips. You pay the EOR the salary, employer contributions and its fee. See how to hire employees in Kenya and what an employer of record is, and compare providers in the EOR ranking.

Records to keep

Keep monthly payroll reports, payslips, remittance receipts from each agency, employee registration numbers (KRA PIN, SHA, NSSF), and authorisations for voluntary deductions. KRA generally expects records to be kept for at least five years. Good records make audits quicker and help resolve employee questions about their contributions.

Checking an employee's contributions

Employees can check their contributions through each agency's online services, such as the NSSF member portal, their SHA account and iTax for PAYE. Encourage employees to check periodically; if contributions are missing, it often reveals a remittance or registration problem that is easier to fix early.

Common mistakes

• Still deducting NHIF instead of SHIF.
• Applying SHIF at the old fixed amounts instead of 2.75%.
• Using last year's NSSF earnings limits.
• Forgetting the employer's Housing Levy share and NITA.
• Calculating PAYE before deducting SHIF, the Housing Levy and NSSF.
• Missing monthly deadlines.

Statutory deductions at different salary levels

The table below summarises the employee's statutory deductions and the employer's extra costs at four salary levels, assuming no other benefits:

• KES 30,000: SHIF 825, Housing Levy 450, NSSF 1,800, PAYE 731.25; net pay 26,193.75. Employer adds 2,300.
• KES 50,000: SHIF 1,375, Housing Levy 750, NSSF 3,000, PAYE 5,845.85; net pay 39,029.15. Employer adds 3,800.
• KES 100,000: SHIF 2,750, Housing Levy 1,500, NSSF 6,000, PAYE 19,308.35; net pay 70,441.65. Employer adds 7,550.
• KES 250,000: SHIF 6,875, Housing Levy 3,750, NSSF 6,480, PAYE 62,251.85; net pay 170,643.15. Employer adds 10,280.

The employer amounts are its Housing Levy share, its NSSF share and the KES 50 NITA levy. Notice how NSSF stops growing above KES 108,000 while SHIF and the Housing Levy keep rising with pay.

Budgeting employer costs for a new hire

When you plan a new role, budget for the employer's statutory share on top of the agreed gross salary: 1.5% for the Housing Levy, 6% of pensionable pay up to the NSSF cap, and KES 50 for NITA. For most professional salaries, that is a few percent of gross pay, lower than in many countries. The bigger extras are usually voluntary benefits that candidates expect, such as private medical cover, a pension top-up and allowances. Include them in your offer comparison, and if you hire through an employer of record, add its monthly fee; the EOR cost calculator totals everything.

Registering a new employee

When someone joins, collect their KRA PIN, national ID or passport details, NSSF number and SHA registration, along with bank or mobile money details and any documents for reliefs. If an employee is not yet registered with NSSF or SHA, help them register promptly so contributions can be credited to them. Add them to payroll from their start date, and prorate the first month's salary and deductions if they start mid-month. Keep copies of registrations on file.

Deductions when an employee leaves

In the final month, statutory deductions apply to all taxable pay, including notice pay and payment for unused leave. Remit them as normal by the deadlines. Issue the employee's final payslip and their P9 for the year, and make sure the final NSSF and SHIF remittances are complete so their records are up to date. If you pay severance on redundancy, check its tax treatment with your provider. A certificate of service is also required under the Employment Act.

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