A PAYE credit of 15% of your premiums, capped at KES 5,000 a month.
Monthly relief (PAYE credit)
—
Annual relief
—
Cap binds at
—
A credit, not a deduction
Insurance relief is one of the friendlier features of the Kenyan payroll system, and it is worth understanding exactly how it works because the structure is easy to misread. It is a tax credit, not a deduction. A deduction shrinks the income that gets taxed; a credit comes off the tax bill itself, shilling for shilling. So when this tool tells you your relief is KES 3,000 a month, it means your PAYE for that month falls by KES 3,000, full stop. That is a more valuable thing than a deduction of the same size, because you keep the entire amount rather than just your marginal-rate slice of it.
The relief is calculated as 15 percent of the premiums you pay on qualifying policies, which is the rate the calculator applies, subject to a ceiling. It sits alongside the personal relief that every resident already gets, so the two stack: personal relief comes off your PAYE first, and insurance relief comes off as well. The 15 percent rate and the cap below are the figures modelled here, and because reliefs are revisited in successive Finance Acts, it is worth confirming the current numbers with the Kenya Revenue Authority.
Which premiums count
Three broad categories qualify: life assurance, health cover, and education policies. Pure investment products dressed up as insurance generally do not count, and the policy usually has to be on your own life, your spouse, or your child. The notable recent change is that contributions to the Social Health Insurance Fund, the SHIF scheme that replaced NHIF, now also qualify for insurance relief. That matters for almost every formal employee, because SHIF is compulsory, so many people are entitled to relief they may not have claimed. If you pay private medical premiums on top of SHIF, both can feed into the 15 percent calculation, up to the cap.
A KES 20,000-a-month premium worked through
Take the default input of KES 20,000 in monthly premiums. Fifteen percent of that is KES 3,000, comfortably under the monthly ceiling, so the full KES 3,000 is your relief. Over a year that is KES 36,000 knocked off your PAYE. Because you are below the ceiling, every extra shilling of premium still earns you fifteen cents of relief, right up until your premiums reach the point where the cap takes over.
| Step | Amount |
|---|
The chart shows the monthly relief versus the unused headroom to the cap.
Where the KES 5,000 ceiling bites
The cap is the number to keep in mind if you carry heavy cover. Relief is capped at KES 5,000 a month, which is KES 60,000 a year. Working backwards, KES 5,000 is 15 percent of KES 33,333, so once your monthly premiums climb past about KES 33,333 you have squeezed every drop of relief out of the system. Premiums above that level still protect you, but they buy no further tax saving. A practical tip for a household juggling several policies: the cap applies to your total qualifying premiums, not to each policy separately, so a single rich life policy and a stack of smaller ones share the same KES 5,000 limit. The common mistake is assuming a second policy doubles the benefit. Past the cap it does nothing for your tax, so beyond that point you should buy cover for protection alone, not for the relief.
Does my SHIF contribution really qualify now?
Yes, that is the headline shift since 2025. SHIF, the health fund that took over from NHIF, is treated as a qualifying health contribution for insurance relief. Since SHIF is mandatory for formal employees, most people are sitting on at least some relief through it. If your payslip shows SHIF being deducted but no insurance relief credited, raise it with your payroll team and confirm the treatment with the KRA.
Who actually claims the relief if my employer runs my PAYE?
For an employee, the employer usually applies insurance relief inside the monthly PAYE calculation, provided you have given them proof of the policy. You do not have to wait for an annual refund. If a premium was missed during the year, you can still reconcile it when you file your annual return on iTax, where the relief is set against the tax you owe.