President William Ruto has officially signed the Finance Bill 2025 into law, introducing major tax reforms, business incentives, and expanded reliefs for workers. The decision follows intense public scrutiny and nationwide protests led by Kenyan youth demanding transparency and fairness in taxation.
Highlights
- Ruto signs Finance Bill 2025 into law at State House, Nairobi.
- Law includes tax reliefs, pension exemptions, and digital economy incentives.
- Employers now required to apply tax benefits automatically.
- Tax on digital asset transactions reduced from 3% to 1.5%.
- Controversial clause granting KRA unrestricted data access was scrapped.
Main Story
In a highly anticipated move, President Ruto assented to the Finance Bill 2025 on Wednesday, June 26, during a ceremony at State House Nairobi. He also signed the Appropriations and Supplementary Appropriations Bills, unlocking funds for the 2025/26 financial year.
The new law compels employers to automatically factor in employee tax deductions and exemptions, easing the compliance burden on workers. Subsistence allowances have also been raised significantly — from KSh 2,000 to KSh 10,000 daily — benefiting employees across sectors.
Tax exemptions now cover all retirement gratuities, including NSSF and private schemes. Mortgage interest relief has been broadened to include SACCO-based loans and self-built homes, helping more Kenyans qualify for housing tax reliefs.
Startups registered under the Startup Act will now enjoy a reduced corporate tax rate of 15% for their first three years, rising to 20% for the next four. In a win for the digital space, the tax on digital asset transactions has been slashed by half — from 3% to 1.5%.
Local manufacturers, agri-businesses, and ICT firms stand to benefit from newly zero-rated inputs. Additionally, the capital gains tax for investments certified under the Nairobi International Financial Centre has been cut from 15% to 5%, encouraging global investors to consider Kenya.
The bill initially included a controversial clause that would have given KRA unrestricted access to taxpayer bank data. Following strong public backlash, the clause was dropped, with access now subject to court-issued warrants.
This year’s bill was notably shaped by public engagement, especially from Gen Z and youth-led movements that organized online and street protests. Unlike the events of 2024 that ended in tragedy, the government appeared more responsive this time, making multiple concessions before the final signing.
From digital shifts to housing wins, the Finance Act 2025 paints a new fiscal path — but will it deliver the balance between revenue and relief Kenyans demand?
