KRA Announces Tax Exemption for Certain Employees
The changes were introduced through the Finance Act, 2025...
✨ Key Highlights
The Kenya Revenue Authority (KRA) has announced significant tax exemptions on gratuity payments for certain employees, effective July 1, 2025. This change, introduced through the Finance Act, 2025, aims to reduce the tax burden on retirees and those leaving long-term employment.
- Gratuity payments earned after July 1, 2025, are now exempt from income tax for both employees and employers, covering both public and private sectors.
- KRA clarified that gratuity earned before July 1, 2025, remains taxable, even if paid after this date, requiring employers to allocate it to past years for tax calculation.
- An additional exemption for gratuity payments from public pension schemes is effective December 27, 2024, under the Tax Laws (Amendment) Act, 2024.
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Government Announces KPA Tariff Hike, KRA Tax Exemption, and Ksh175.75B Bond for JKIA - August 2025
The Kenya Ports Authority (KPA) has announced an increase in tariffs for services at the Port of Mombasa, set to take effect from September 15, 2025. Separately, the Kenya Revenue Authority (KRA) announced significant tax exemptions on gratuity payments for certain employees, effective July 1, 2025, as introduced through the Finance Act, 2025. Additionally, Kenya plans to fund the Jomo Kenyatta International Airport (JKIA) expansion by issuing a Ksh175.75 billion ($1.36 billion) securitised bond next month. This funding strategy leverages the airport's revenues to attract investment rather than relying on traditional sovereign debt.
