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EMPLOYMENT EXPENSES & PERSONAL DEDUCTIONS IN KENYA:

Last reviewed – 26 February 2025

Kenyan tax laws provide exemptions and deductions for employment-related expenses and personal deductions to reduce taxable income.

1. Employment Expenses (Tax-Exempt Reimbursements)

Certain bona fide business expenses are not taxable, including:

 

  • Entertainment, travel, and car expenses (when reimbursed).
  • Airfare & relocation costs for expatriates recruited outside Kenya.
  • Leave passages for expatriates.
  • Medical insurance or medical expense reimbursements.
  • Mileage claims based on the AA Kenya standard rates (Finance Act, 2023).
  • Non-resident contractors, consultants, or employees working on 100% grant-funded projects (Finance Act, 2023).
  • Reimbursements to public officers for official duty expenses (Tax Laws Amendment Act, 2024).

2. Personal Deductions

Mortgage Interest Deduction

Before colonization, Kenya’s communities operated under a socialist economic system, where wealth and resources were communally shared. Chiefs collected a portion of wealth from agricultural produce or trade proceeds to support community welfare. Foreign traders involved in spice or ivory trade had to pay dues to secure passage rights through different territories.

 

This rudimentary taxation system ensured food security and community stability, as resources collected were redistributed in times of drought or famine.

Retirement Benefit Scheme Contributions

Employees contributing to a Kenya-registered retirement benefit scheme can claim deductions up to the lowest of:

 

    • Actual contributions during the year.
    • 30% of pensionable (taxable) income
    • KES 360,000 per annum (KES 30,000 per month) – increased from KES 240,000 (KES 20,000 per month) (TLAA, Dec 2024).

Special Deduction for Expatriates

  • Expatriates employed by a regional office with no business in Kenya can claim a one-third deduction from taxable income.
  • To qualify, they must be absent from Kenya for at least 120 days in a tax year.

Related Content

Tax Landscape
Tax Overview
Tax Rates

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