How to Run Payroll in Kenya in Excel: PAYE, NSSF, SHA and Housing Levy Explained (2026)

If you employ even one person in Kenya, you run payroll every month. That means four statutory deductions, one payslip per employee and a remittance deadline on the 9th of the next month. Most small business owners do this on a calculator or in a spreadsheet they built three years ago and no longer trust. This guide walks through exactly how a Kenyan payroll is calculated in 2026, with a worked example, so you can check your own numbers.

The four statutory deductions

PAYE (Pay As You Earn). Income tax on employment income, charged in bands. The monthly bands are 10% on the first KES 24,000, 25% on the next KES 8,333 (up to KES 32,333), 30% on income from KES 32,334 to KES 500,000, 32.5% from KES 500,001 to KES 800,000, and 35% above that. Every employee gets a personal relief of KES 2,400 per month, which is subtracted from the tax calculated, not from income.

NSSF. The employee pays 6% in two tiers. Tier I is 6% of the first KES 9,000 (KES 540). Tier II is 6% of earnings between KES 9,001 and the upper earnings limit of KES 108,000, which brings the maximum employee contribution to KES 6,480 a month. The employer matches it.

SHA contribution (formerly NHIF, now SHIF). The Social Health Authority contribution is 2.75% of gross salary, paid by the employee.

Affordable Housing Levy. 1.5% of gross salary from the employee, and a matching 1.5% from the employer.

A worked example: KES 80,000 gross salary

• NSSF: KES 540 + 6% of KES 71,000 = KES 4,800
• SHA at 2.75%: KES 2,200
• Housing Levy at 1.5%: KES 1,200
• Taxable pay: 80,000 - 4,800 - 2,200 - 1,200 = KES 71,800
• Tax on the bands: 2,400 + 2,083.25 + 11,840.10 = KES 16,323.35
• Less personal relief of KES 2,400: PAYE of KES 13,923.35
• Net pay: 80,000 - 4,800 - 2,200 - 1,200 - 13,923.35 = KES 57,876.65

The employer also owes its own NSSF match (KES 4,800) and Housing Levy match (KES 1,200), so the real cost of this employee is KES 86,000 before any other benefits. This is an illustration. Rates and allowable deductions change through Finance Acts and KRA circulars, so confirm the current figures on the KRA and SHA websites before you file.

Deadlines and penalties

PAYE returns and payments are due by the 9th of the month following the payroll month. Late filing attracts a penalty of 25% of the tax due or KES 10,000, whichever is higher, plus interest of 1% per month on unpaid tax. Because the deductions are also remitted to NSSF, SHA and the Housing Levy fund, one missed month can create four separate compliance problems.

Where manual payroll goes wrong

• Stale rates. The NSSF limits changed in 2026 and the SHA contribution replaced NHIF. A sheet that still uses old rates under-deducts quietly for months.
• Wrong taxable pay. Forgetting which deductions come off before PAYE is the most common error.
• No audit trail. When an employee queries a payslip or KRA asks questions, you need last year's calculation, not a recalculation.
• Remittances done by hand. Copying totals onto four different portals every month invites typing mistakes.

A ready-made Excel payroll for Kenyan employers

The Kenyan Payroll Management System is a complete payroll workbook built for exactly this. Enter each employee once and it calculates PAYE, NSSF, SHA and the Housing Levy, produces payslips, and prepares the remittance schedules for up to 60 employees. It runs in Excel, so there is no subscription and your data stays on your computer.

See the Kenyan Payroll Management System

If you also keep your own books, pair it with the Karatasi SME Bookkeeping Workbook, so salaries flow into your profit and loss from the same set of records.