School Payroll in Kenya: PAYE, SHIF, NSSF and the Housing Levy Explained (2026)
Written by EduCore Team · Nairobi, Kenya ·
A school is an employer like any other: four statutory deductions come off every payslip, and the rules have moved a lot since 2023. This is what each one is, the rates in force after February 2026, the order they are applied in, a worked example, and where schools most often go wrong.
General information as of September 2026, not tax advice. Confirm against KRA, NSSF and Social Health Authority notices, or with a tax professional, before you run payroll.
Staff on your school's own payroll
Teachers employed by the Teachers Service Commission are paid and taxed through TSC. Everyone your school, its owner or its board employs directly is on your payroll: private-school teachers, administrators, bursars, drivers, cooks, security and other support staff. For them, the school has to work out, deduct, and remit these four items every month.
What comes off a payslip in 2026
NSSF
- Employee
- 6% of pensionable pay up to KES 108,000 (from February 2026)
- Employer
- Matches the employee's 6%
- Maximum
- KES 6,480 each per month
- What changed
- In February 2026 the lower limit rose to KES 9,000 and the upper limit to KES 108,000, lifting the maximum from KES 4,320 to KES 6,480.
SHIF
- Employee
- 2.75% of gross pay, minimum KES 300
- Employer
- Deducts and remits it; no employer match
- Maximum
- None
- What changed
- SHIF replaced NHIF from October 2024. NHIF's salary bands no longer apply.
Housing Levy
- Employee
- 1.5% of gross pay
- Employer
- Matches the employee's 1.5%
- Maximum
- None
- What changed
- Since December 2024 it is deducted before PAYE is worked out, and the separate 15% housing relief has ended.
PAYE
- Employee
- 10% to 35% in five bands, less KES 2,400 monthly personal relief
- Employer
- Withholds and remits; no match
- Charged on
- Taxable pay: gross, less NSSF, SHIF and the Housing Levy
- What changed
- Bands are the Finance Act 2023 bands and are not changed by the Finance Act 2026.
Monthly PAYE bands
| First KES 24,000 | 10% |
| Next KES 8,333 (to 32,333) | 25% |
| Next KES 467,667 (to 500,000) | 30% |
| Next KES 300,000 (to 800,000) | 32.5% |
| Above KES 800,000 | 35% |
Deduct first, then tax what is left
PAYE is not charged on gross pay. Since 27 December 2024, KRA's notice on the Tax Laws (Amendment) Act 2024 has allowed the Housing Levy and SHIF contributions to be deducted in arriving at taxable pay, alongside NSSF. So the sequence is: take NSSF, SHIF and the Housing Levy off gross pay, apply the PAYE bands to what is left, then subtract the KES 2,400 personal relief from the tax.
This is where older guides and older payroll spreadsheets go wrong. Before the change, the Housing Levy and NHIF were taken after PAYE and taxable pay was gross minus NSSF only.
A KES 50,000 monthly salary
| Gross pay | 50,000.00 |
| NSSF (6%; 540 + 2,460) | − 3,000.00 |
| SHIF (2.75%) | − 1,375.00 |
| Housing Levy (1.5%) | − 750.00 |
| Taxable pay | 44,875.00 |
| Tax before relief (2,400 + 2,083.25 + 3,762.60) | 8,245.85 |
| Less personal relief | − 2,400.00 |
| PAYE payable | 5,845.85 |
| Net pay | 39,029.15 |
Illustrative arithmetic using the 2026 rates above, shown to the cent. It is not a payslip from any school. The employer would also pay NSSF of KES 3,000 and a Housing Levy match of KES 750 on this salary.
The 9th of the following month
PAYE, SHIF and the Housing Levy are due by the 9th of the month after the payroll month; PAYE is filed through KRA's iTax and the levy is remitted to KRA. Most 2026 guides give the same date for NSSF, but the NSSF Act has historically used the 15th, so check the date on your NSSF employer portal rather than trusting a general guide. Late payment attracts penalties and interest.
Keep monthly payroll records for every staff member, including casual and contract workers. Five years is the commonly advised minimum.
Five mistakes schools make
- 01
Using NHIF bands, or last year's NSSF limits
Anything still calculated on NHIF or on the pre-February 2026 NSSF limits under-deducts for higher earners.
- 02
Taking the Housing Levy off after PAYE
That was the old order. Deducted first, it lowers taxable pay and so the tax.
- 03
Forgetting the employer's own share
The school's NSSF and Housing Levy match are real costs that belong in the budget, not just on the remittance slip.
- 04
Leaving out casual and contract staff
Guides on payroll compliance repeatedly list omitted casual and contract workers as a common error. Wages above the taxable level are taxable whatever the contract type.
- 05
Paying late
Late remittance attracts penalties and interest. A payroll that is approved on the 8th of the month leaves no room.
What it computes, and what it leaves to you
EduCore's payroll works out the employee's NSSF, SHIF, Housing Levy and PAYE, with the KES 2,400 personal relief, in the order described above. The statutory rates are kept in a table with effective dates, maintained by EduCore, so a payroll run for a given month uses the rates that applied that month, including the February 2026 NSSF limits. You keep salary structures per staff member, add itemised other deductions, and produce payslip PDFs that show the school's KRA PIN and each staff member's KRA, NSSF and SHIF numbers where you have entered them.
A payroll run moves from draft to approved to paid. Approval needs its own permission, so the person who prepares payroll is not necessarily the person who signs it off, and an approved record can't be silently regenerated.
What it does not do: file returns or remit money to KRA, NSSF or the Social Health Authority, show the employer's matching costs on the payslip, or apply other reliefs such as insurance premiums, mortgage interest or pension contributions beyond NSSF. Those need your accountant. We also ask you to have a tax professional confirm the figures before you rely on them for statutory filings. Read about the finance and fees module for the rest of the finance features.
Frequently asked questions
Does the school also pay NSSF and the Housing Levy?
Yes. Both are matched by the employer. The employer pays 6% NSSF on pensionable pay up to the KES 108,000 limit (up to KES 6,480 per person per month from February 2026) and 1.5% of gross for the Housing Levy, on top of the employee's own deductions. These are a cost to the school, not something taken from the staff member's pay.
What replaced NHIF?
The Social Health Insurance Fund (SHIF), collected by the Social Health Authority, replaced NHIF from October 2024. It is 2.75% of gross pay with a minimum of KES 300, with no bands and no upper cap.
Are SHIF and the Housing Levy taken off before PAYE is calculated?
Yes. Under KRA's notice on the Tax Laws (Amendment) Act 2024, effective 27 December 2024, contributions to SHIF and the Affordable Housing Levy are deductible in arriving at taxable pay, alongside NSSF. Guides written before that date still show the old order.
Do teachers employed by the TSC go on our school payroll?
Generally not. Teachers employed by the Teachers Service Commission are paid and taxed through TSC. This guide is for staff your school or its owner or board employs directly, for example private-school staff and non-teaching staff on a board or owner payroll.
Did the Finance Act 2026 change PAYE?
According to an employer bulletin published shortly after the Act was assented to on 26 June 2026, it did not change the PAYE bands, personal income tax rates or personal reliefs. A proposed cut for lower earners that had been discussed earlier in 2026 was not enacted. Check KRA's current notices before each year-end.
Rates and rules change, and this guide is not affiliated with KRA, NSSF or the Social Health Authority. It reflects publicly reported information as of September 2026 and is not tax advice. Confirm current figures with the relevant authority or a qualified tax professional.
Run a test payroll before you commit.
Thirty days, no card. Try a sample salary and compare the result with your accountant's.