Combined tax on salary plus a side gig.
Extra tax on side income
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Net side income
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Combined annual tax
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Turnover Tax option
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When the side gig meets the day job at tax time
Plenty of people in Kenya run something on the side: consulting in the evenings, an online shop, freelance design, a small import line. The income is welcome, but it lands on top of a salary that is already taxed, and that is where the confusion starts. Your employer deducts PAYE on your salary as if that were your whole income, so the side money has not had any tax taken yet. This calculator works out the extra tax the side income creates once it is stacked on your salary, and it flags whether a simpler turnover-based regime might apply instead.
It is for the salaried professional with a growing side income who wants to avoid a nasty surprise at filing time, and for anyone deciding whether their hustle has outgrown casual status. Because the side income is taxed at the rate that sits on top of your salary, two people earning the same side profit can owe very different amounts depending on what their day job pays.
Why your side income is taxed at your top rate
Kenya taxes individuals on a progressive scale, so your income fills up the bands from the bottom. Your salary has already used up the lower bands, which means the side income piles on at whatever band you have reached, your marginal rate. For a mid-to-high salary that marginal band is 30 percent in the rates this calculator applies, so almost every shilling of side profit is taxed at that rate. The figure that gets taxed is your net side income, that is your side revenue after deducting the genuine expenses of earning it. The tool subtracts your expenses first, then adds the net to your annual salary and recomputes the total tax. The difference between that and the tax on your salary alone is the extra tax the side gig creates. The bands and rates here have shifted across recent Finance Acts, so confirm the current scale with the Kenya Revenue Authority.
A 600,000 side income on a 90,000 monthly salary
Take the defaults: a salary of KES 90,000 a month, which is KES 1.08 million a year, plus KES 600,000 of side revenue against KES 150,000 of expenses. The net side income is KES 450,000, and because the salary has already pushed you into the 30 percent band, the whole KES 450,000 is taxed at 30 percent.
| Step | Amount (KES) |
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The chart shows the net side income split between the tax it carries and what stays with you.
The Turnover Tax fork, and the trap inside it
There is a second route for small businesses. If your side business has annual turnover above KES 1,000,000 and up to KES 25,000,000, Turnover Tax can apply at 3 percent of gross turnover instead of the normal income-tax treatment. In the example above the turnover is only KES 600,000, below the floor, so the tool reports that you are not in the band and the normal rules stand. The trap is the word gross. Turnover Tax is charged on your total revenue with no deduction for expenses, while the income-tax route taxes only your net profit. For a business with thin margins and high costs, 3 percent of gross can easily exceed 30 percent of a small net profit, so the simpler regime is not always the cheaper one. Run both before assuming Turnover Tax saves you money, and confirm the current thresholds with the KRA.
A practical tip that saves people the most pain: keep clean records of your side income and expenses from day one. The whole calculation rests on being able to evidence your net profit, and reconstructing a year of M-Pesa statements in a panic before filing is miserable. The common mistake is treating side income as invisible because no employer reported it. The obligation to declare it sits with you, and the figures often leave a trail anyway.
Does my employer know about or deduct tax on my side income?
No. Your employer only deducts PAYE on the salary it pays you. The tax on your side income is your responsibility to declare and settle, normally through your annual self-assessment return. That is exactly why the extra tax in this tool can feel like a surprise: nobody has been withholding it for you during the year, so set money aside as you earn the side income.
Which side-hustle expenses can I actually deduct?
Broadly, expenses that are genuinely incurred in producing the income, things like materials, platform or transaction fees, and the business portion of costs you use partly for the hustle. Purely personal spending does not count, and mixed-use items need a sensible split. Because the line between deductible and personal can be fine, keep receipts and confirm borderline categories with the KRA or a tax adviser rather than guessing.