Thousands salaried employees will enjoy lower taxes from January as the government effects changes to the income tax law.
The amount that is return to an employee, taken from the total tax (tax relief) is also expected to go higher.
Lower taxes are not only the things employees should be proud of, but also if they go through, the proposals for eliminating taxes on bonuses, overtime and retirement benefits paid to workers who fall under the lowest income tax band though there is no mention of how this will be effected in the circular sent to companies.
2017, the year workers long for
From January 1, next year, personal relief will be raised from the current Sh13,944 per year (Sh1,162 per month) to Sh15,360 per year (Sh1,280 per month).
Treasury has notified human resource departments across the country to effect the changes from January.
The bottom of the scale workers who currently earn Sh10,164 per month, mainly cleaners, subordinate staff, messengers and other low cadre staff, and pay a total income tax of Sh1,016, will now be fully exempted from the deduction as the lowest taxable bracket now climbs to Sh11,180 per month.
Those earning Sh38,893 (entry level graduate employees) in the public sector and which is the current starting point of the highest band where a 30 per cent income tax is applicable, will also enjoy a reduction as the highest rate now will now touch those earning Sh42,782 and above.
“Effective 1st January 2017, annual tax bands should be expanded by 10 per cent and a personal relief increased from the current Sh13,944 per annum (Sh1,162 per month) to Sh15,360 per annum (Sh1,280 per month),” reads the circular sent to companies and organisations.