Taxes are an unavoidable part of doing business and earning income, but the good news is that the Kenya Revenue Authority (KRA) provides reliefs and deductions to help ease the tax burden. Unfortunately, many individuals and SMEs are unaware of the reliefs they qualify for — meaning they pay more tax than necessary.
In this guide, we’ll break down the main tax reliefs and deductions available in Kenya for 2025, how they work, and who qualifies.
What Are Tax Reliefs and Deductions?
- Tax Reliefs: These are specific amounts deducted directly from your calculated tax, reducing the final tax payable.
- Tax Deductions: These are expenses subtracted from your gross income before calculating taxable income, lowering your overall tax liability.
Both are designed to encourage savings, investment, and compliance.
1. Personal Relief (Mandatory for All Residents)
Every resident individual in Kenya is entitled to a monthly personal relief of KSh 2,400 (KSh 28,800 annually). This amount is automatically applied to reduce PAYE or self-assessment tax.
✔️ Who qualifies? All resident taxpayers.
2. Insurance Relief
Individuals who pay life insurance, health insurance, or education policy premiums are entitled to 15% relief on the premiums paid, capped at KSh 5,000 per month.
✔️ Who qualifies? Individuals paying premiums for themselves, spouses, or children.
3. Mortgage Interest Deduction
If you have taken a mortgage to buy or improve a residential house in Kenya, you can deduct up to KSh 300,000 annually on interest paid.
✔️ Who qualifies? Homeowners with KRA-approved mortgage lenders.
4. Home Ownership Savings Plan (HOSP)
Contributions made to a registered HOSP qualify for deductions up to KSh 96,000 per year (KSh 8,000 per month).
✔️ Who qualifies? Individuals saving towards home ownership.
5. Retirement Contributions (Pension Schemes)
Contributions to a registered pension scheme are deductible up to KSh 20,000 per month or 30% of salary (whichever is lower).
✔️ Why important? Encourages retirement savings while reducing current tax burden.
6. Disability Exemption
Persons with disability, upon applying through KRA, are exempted from paying tax on their income up to KSh 150,000 per month.
✔️ Who qualifies? Certified persons with disability holding an exemption certificate.
7. SME Deductions & Allowances
SMEs and businesses also enjoy deductions that reduce taxable profits:
- Capital Allowances: Deduction on machinery, equipment, and buildings used in business.
- Wear & Tear Allowance: Deduction for depreciation of business assets.
- Training Expenses: Deduction for training employees in skills relevant to the business.
- Donations: Certain charitable donations are tax deductible (if approved by KRA).
Practical Example: Applying Reliefs
Let’s say James earns a salary of KSh 70,000 per month and pays KSh 5,000 in health insurance premiums and KSh 10,000 to a pension scheme.
- Gross Income: 70,000
- Less Pension Contribution: 10,000 → Taxable Income = 60,000
- PAYE Tax Computed (based on 2025 bands): 13,135
- Less Personal Relief: 2,400
- Less Insurance Relief: 750 (15% of 5,000)
- Final PAYE Payable: KSh 9,985
👉 By claiming reliefs, James saves KSh 3,150 every month.
FAQs: Tax Reliefs and Deductions in Kenya
Q1. Do I have to apply for personal relief?
➡️ No, it’s automatically applied by KRA.
Q2. Can SMEs claim personal relief?
➡️ No, personal relief is only for individuals. SMEs can claim business expense deductions instead.
Q3. What happens if I don’t claim my insurance relief?
➡️ You miss out on savings, and your tax burden remains unnecessarily high.
Final Thoughts
Tax reliefs and deductions are powerful tools for reducing tax liability. Whether you are an individual employee, self-employed professional, or SME, knowing what you can claim is the difference between overpaying and smart tax planning.
At Mwirigi Tax Consultants, we help individuals and businesses maximize their tax reliefs while staying compliant with KRA.
👉 Need help with your tax planning? Contact us today for expert guidance.
