Pension Contribution Tax Relief Calculator

How a pension contribution lowers your PAYE

PAYE is charged on taxable income, not raw gross pay. A contribution to a registered retirement scheme is one of the deductions applied before KRA's tax bands (see the Income Tax Calculator), so contributing effectively moves a slice of your income out of the band it would otherwise have been taxed in. The relief isn't a separate refund — it shows up as a smaller PAYE bill on the same payslip.

That relief is capped: only the first KES 30,000 of monthly contribution to a registered scheme is deductible. Contribute more than that, and the excess still builds your retirement pot, but it's taxed the same as if it hadn't been contributed at all.

Worked example: KES 150,000 gross, KES 10,000 contribution

Take the calculator's own defaults: KES 150,000 gross monthly income and a KES 10,000 monthly pension contribution, which is under the KES 30,000 cap, so all of it is allowable relief. Applying KRA's PAYE bands to the full KES 150,000 gives KES 37,383 due after personal relief; applying them to KES 140,000 (gross less the KES 10,000 contribution) gives KES 34,383 due. The difference — KES 3,000 — is the PAYE saved this month.

That KES 3,000 is exactly 30% of the KES 10,000 contributed, because both KES 150,000 and KES 140,000 fall inside the band taxed at 30% — the whole contribution is relieved at that marginal rate. Move enough of your income into a different band, and the saving per shilling contributed would change accordingly.

What this doesn't cover

This is an illustration of the relief mechanism, not tax advice — confirm your own position, and that your scheme is actually registered and qualifies, with KRA or a tax adviser. It also doesn't include NSSF, which is a separate statutory contribution with its own treatment (see the NSSF Pension Calculator).