The Finance Bill 2025 has finally been unveiled, sparking wide-ranging conversations about its potential impact on the lives of ordinary Kenyans. Amid social media misinformation and politically charged narratives, it’s crucial to highlight the progressive proposals that promise relief, equity, and economic growth.
A major win for salaried workers is the automatic application of statutory deductions such as the Social Health Authority (SHA), Housing Levy, and mortgage interest reliefs before calculating Pay As You Earn (PAYE). This means lower taxes and more take-home pay without waiting for KRA refunds, ensuring predictability and simplifying personal financial planning.
For retirees, the bill delivers long-overdue justice by exempting both lump sum and monthly pension payments from taxation. This shift, now extended to include private pension schemes, empowers our senior citizens with higher disposable income and dignified retirement.
Small businesses will also benefit from simplified tax processes. They can now deduct the full cost of tools and equipment, like utensils, in the same year of purchase reducing compliance burden and improving cash flow.
To fight tax fraud and inefficiencies, the bill introduces tighter controls that will save the country billions by sealing loopholes previously exploited by unscrupulous entities. These savings can be redirected to infrastructure, health, education, and water projects.
Significantly, the digital service tax has been abolished great news for Gen Z content creators and online entrepreneurs. This aligns Kenya with global digital tax norms and supports innovation and job creation in the digital economy.
Other reforms include raising the daily tax-free per diem allowance from Sh2,000 to Sh10,000 and halving the crypto tax from 3% to 1.5%, enhancing fairness and boosting morale among formal sector workers and fintech enthusiasts.
Moreover, to curb wasteful government spending and reduce national debt, the fiscal deficit target has been lowered to 4.5% of GDP. As Nobel Laureate Joseph Stiglitz rightly said, “A country’s tax policy is ultimately a statement about its values.”
The Finance Bill 2025 reflects values of fairness, growth, and innovation—an optimistic blueprint for Kenya’s economic future.
