Individual Income Tax
Annual tax on all income sources for individuals. Comprehensive guide to filing requirements, rates, reliefs, and compliance obligations for personal income tax in Kenya.
What is Individual Income Tax?
Understanding personal income tax obligations
Individual Income Tax is an annual tax imposed on the total income of a person resident in Kenya. Unlike PAYE which is deducted monthly from employment income, individual income tax covers all income sources and is filed annually. It ensures comprehensive taxation of business income, rental income, investment income, and other sources beyond employment.
Who Must File?
All Kenyan residents with total annual income exceeding KSh 288,000, business owners, professionals, property owners with rental income, and individuals with multiple income sources must file annual returns.
Filing Deadline
Annual income tax returns must be filed by 30th June of the year following the income year. Late filing attracts penalties of KSh 20,000 or 25% of tax due.
Progressive Rates
Same progressive tax bands as PAYE: 10% to 35% based on annual income levels, ensuring equitable taxation across different income brackets.
Comprehensive Coverage
Covers employment income, business profits, rental income, dividends, interest, professional fees, and all other income sources earned during the tax year.
Types of Taxable Income
All income sources subject to individual income tax
Individual Income Tax Rates 2024
Progressive tax bands for annual income assessment
| Annual Income Band (KSh) | Tax Rate | Cumulative Tax (KSh) | Marginal Tax per Band (KSh) |
|---|---|---|---|
| 0 - 288,000 | 10% | 0 - 28,800 | 28,800 |
| 288,001 - 388,000 | 25% | 28,801 - 53,800 | 25,000 |
| 388,001 - 6,000,000 | 30% | 53,801 - 1,737,400 | 1,683,600 |
| 6,000,001 - 9,600,000 | 32.5% | 1,737,401 - 2,907,400 | 1,170,000 |
| Above 9,600,000 | 35% | Above 2,907,400 | 35% of excess |
Tax Calculation Example
Annual Income: KSh 500,000
• First KSh 288,000 @ 10% = KSh 28,800
• Next KSh 100,000 @ 25% = KSh 25,000
• Remaining KSh 112,000 @ 30% = KSh 33,600
• Total Tax Before Relief: KSh 87,400
• Less Personal Relief: KSh 28,800
• Final Tax Liability: KSh 58,600
Available Tax Reliefs
Deductions and reliefs to reduce your tax liability
Annual Filing Process
Step-by-step guide to filing individual income tax returns
Gather Required Documents
Collect all income statements: P9 form from employer, bank statements, rental agreements, business records, investment statements, and receipts for allowable deductions.
Access iTax Portal
Log into KRA's iTax portal using your KRA PIN. Navigate to "Returns" section and select "File Return" for Individual Income Tax (IT1).
Complete Income Declaration
Enter all income sources including employment, business, rental, and investment income. Ensure accuracy and completeness of all entries.
Claim Allowable Deductions
Enter pension contributions, insurance premiums, HOSP contributions, and other allowable deductions with supporting documentation.
Review and Calculate Tax
Review all entries, apply reliefs, and calculate final tax liability. The system will automatically compute tax due or refund amount.
Submit and Pay
Submit the return by 30th June and pay any outstanding tax. If entitled to a refund, follow up through iTax portal for processing.
Common Filing Issues & Solutions
Avoid these common mistakes and penalties
Late Filing
Filing returns after 30th June attracts penalties of KSh 20,000 or 25% of tax due (whichever is higher), plus 1% monthly interest on outstanding tax.
Solution: File by 15th June to allow processing time and avoid last-minute technical issues.
Incomplete Income Declaration
Failing to declare all income sources, especially rental income, business income, or investment returns, can lead to penalties and interest charges.
Solution: Maintain comprehensive records and declare all income sources, even if withholding tax was already deducted.
Excessive Relief Claims
Claiming reliefs beyond statutory limits or without proper documentation can trigger audits and result in additional tax assessments.
Solution: Keep all supporting documents and ensure relief claims are within statutory limits and properly documented.
Poor Record Keeping
Inadequate documentation makes it difficult to support deductions and reliefs, potentially leading to disallowed claims during audits.
Solution: Maintain organized records throughout the year with digital copies of all supporting documents.
Frequently Asked Questions
Common individual income tax questions answered
Do I need to file if my employer already deducts PAYE?
If you only have employment income and your employer correctly deducts PAYE, filing may be optional. However, you must file if you have other income sources, want to claim additional reliefs, or if your total annual income exceeds KSh 3 million. Filing allows you to claim refunds if excess PAYE was deducted.
How do I handle income from multiple sources?
Declare all income sources in your annual return: employment (use P9 form), business income (use audited accounts), rental income, investment income, and professional fees. Each income type may have different withholding tax rates that can be offset against your final liability.
Can I claim business expenses as an individual?
Yes, if you operate as a sole proprietor or have professional practice income, you can deduct legitimate business expenses including office rent, equipment depreciation, professional fees, travel expenses, and other expenses wholly and exclusively incurred for business purposes.
What happens if I discover errors after filing?
You can file an amended return within the allowed timeframe. If the error results in additional tax due, pay immediately to minimize penalties and interest. If you're entitled to a refund, file the amended return as soon as possible. Keep documentation supporting all changes.
How long does it take to receive a tax refund?
Tax refunds typically take 30-90 days to process after filing, depending on the complexity of your return and KRA's verification requirements. You can track refund status through the iTax portal. Large refunds or those requiring verification may take longer.
Are foreign income and assets subject to Kenyan tax?
Kenyan residents are taxed on worldwide income, including foreign employment, business, and investment income. However, you may claim relief for foreign taxes paid under double taxation agreements. Foreign assets may also be subject to disclosure requirements depending on their value.