PAYE impact of overtime on top of base pay.
Net overtime kept
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Extra PAYE on overtime
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Effective marginal rate
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Why your overtime is taxed harder than your salary
When you put in extra hours, the pay for those hours does not get its own gentle starting rate. It lands on top of everything you have already earned that month, so it is taxed at the highest PAYE band your income has climbed into. Kenya runs PAYE on a progressive scale, which means the first slice of your monthly pay is taxed lightly and each later slice is taxed more. By the time your overtime arrives, the cheap lower bands are already used up by your base salary. That is the whole reason the take-home on overtime can feel disappointing even though the gross looked generous.
This tool isolates exactly that effect. It takes the PAYE on your base pay, then the PAYE on your base plus the overtime, and the difference is the extra tax the overtime alone creates. The structure of the bands is the stable part and safe to rely on. The specific band edges and rates are the figures this calculator applies, and because Kenya has reshaped payroll rules through successive Finance Acts, you should confirm the current numbers with the KRA before treating any single figure as settled.
The marginal rate, and why it is not your average rate
Most people quietly assume overtime is taxed at whatever average rate they pay across their salary. It is not. It is taxed at the marginal band, the rate that sits at the top of your earnings. If your income has already crossed into the band that the calculator applies at 30 percent, then broadly every extra shilling of overtime is taxed near 30 percent, not the lower blended figure your payslip might suggest for the month as a whole. The personal relief, a flat monthly credit of KES 2,400 as modelled here, has usually been soaked up by your base pay, so it does not soften the tax on the overtime shillings.
A worked case: KES 10,000 of overtime on a KES 28,000 base
Take a base monthly taxable pay of KES 28,000 and KES 10,000 of overtime, so the total reaches KES 38,000. This example is deliberately chosen because the overtime straddles a band edge, which is where the arithmetic gets interesting. The PAYE on KES 28,000 is KES 3,400. The PAYE on KES 38,000 is KES 6,183. The gap, KES 2,783, is the tax the overtime triggers, using the rates this calculator applies.
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Notice that the effective rate, 27.83 percent, sits between two bands. That is because the first KES 4,333 of the overtime fills the rest of the 25 percent band and the remaining KES 5,667 spills into the 30 percent band. Had the base pay already been deep inside the 30 percent band, the whole KES 10,000 would have been taxed near 30 percent and you would have kept closer to KES 7,000. The calculator shows whole shillings, so it rounds the band arithmetic to the nearest shilling for display.
A common mistake and a practical tip
The mistake worth avoiding is negotiating overtime on the gross figure alone. If a manager offers you KES 10,000 for a weekend of work, the real comparison is the net, which in the case above is KES 7,217. The higher your salary already sits, the smaller the net share. The practical move is to think in net terms before you agree, and to remember that overtime never benefits from the personal relief twice. Spreading heavy overtime across two months rather than piling it into one will not usually change much, because PAYE is computed monthly and each month gets its own bands and its own relief, but it does stop a single month from spiking into a higher band if you are near an edge.
This calculator is for salaried employees who are paid hourly extras, shift premiums, or weekend rates, and who want to know what actually reaches their account. It is not a full payslip model, so it does not re-run SHIF, NSSF, or the housing levy on the overtime. Treat the result as the PAYE picture and confirm the live bands and reliefs with the KRA.
Does overtime get a lower tax rate than normal pay?
No. There is no special discounted rate for overtime in Kenya. It is added to your taxable pay for the month and taxed at the marginal band it reaches. If anything it tends to feel taxed harder, because it stacks on income that has already used up the lighter lower bands.
Will overtime push my whole salary into a higher tax band?
No. Only the shillings that cross into a higher band are taxed at that higher rate. Your existing salary keeps the rates it already attracted. Progressive taxation never re-rates your base pay just because you earned extra on top, so you can never lose money by working overtime.