Career advice · Updated October 2026
NSSF, SHIF and Housing Levy Explained: Kenya's Payroll Deductions in 2026
Photo: Mikhail Nilov / Pexels (Pexels License, free to use)
Three statutory deductions now take a noticeable share of every Kenyan payslip: NSSF, SHIF and the Housing Levy. All three changed between 2024 and 2026, which is why many workers saw their take-home pay fall even without a pay cut. This guide explains what each one is, how much it costs, and how it affects your tax.
At a glance (October 2026)
| Deduction | Employee | Employer | Cap | Tax-deductible? |
|---|---|---|---|---|
| NSSF | 6% of pay up to KSh 108,000 | 6% (matched) | KSh 6,480 employee | Yes |
| SHIF | 2.75% of gross | None for salaried staff | No cap; min KSh 300 | Yes, since 27 Dec 2024 |
| Housing Levy | 1.5% of gross | 1.5% | No cap | Yes, since 27 Dec 2024 |
NSSF: your retirement savings
What it is
The National Social Security Fund is Kenya’s mandatory pension scheme. Contributions are saved in your name and paid out at retirement, or earlier in specific cases such as invalidity, emigration or to survivors after death. Business Radar explains when you can claim NSSF benefits.
How much you pay
Under the NSSF Act’s phased rates, Year 4 began on 1 February 2026. You and your employer each pay 6% of your pensionable pay:
- Tier I: 6% of the first KSh 9,000 (maximum KSh 540).
- Tier II: 6% of pay between KSh 9,001 and KSh 108,000 (maximum KSh 5,940).
So anyone earning KSh 108,000 or more pays KSh 6,480 a month, and their employer pays the same. These figures come from the NSSF notice to employers on Year 4 rates. Check yours with the NSSF calculator.
Contracting out of Tier II
The Act allows employers with a registered pension scheme that meets the legal requirements to direct Tier II contributions to that scheme instead. Your payslip may then show Tier II going to a different fund.
SHIF: health insurance
What it is
The Social Health Insurance Fund replaced NHIF on 1 October 2024 under the Social Health Insurance Act, 2023, and is managed by the Social Health Authority (SHA). It covers you and your declared dependants for services under the SHA benefits package at contracted facilities.
How much you pay
2.75% of your gross monthly pay, with a minimum of KSh 300 and no upper limit. Someone earning KSh 50,000 pays KSh 1,375; someone earning KSh 300,000 pays KSh 8,250. Try the SHIF calculator.
Affordable Housing Levy
What it is
The Affordable Housing Levy funds the government’s affordable housing programme under the Affordable Housing Act, 2024. Contributors can apply for affordable housing units under the programme’s rules.
How much you pay
1.5% of gross pay, and your employer pays another 1.5%. On KSh 100,000 that is KSh 1,500 from you and KSh 1,500 from your employer.
How these deductions affect your PAYE
Since the Tax Laws (Amendment) Act 2024 took effect on 27 December 2024, SHIF and the Housing Levy are deducted from your gross pay before PAYE is calculated, just like NSSF. This reduces your tax. For example, at the 30% PAYE band, each KSh 1,000 of SHIF lowers your PAYE by KSh 300. The older 15% Housing Levy relief no longer applies. Our guide on how PAYE works in Kenya has a worked example.
Example: KSh 60,000 gross salary
| Item | KSh |
|---|---|
| NSSF (540 + 3,060) | 3,600.00 |
| SHIF | 1,650.00 |
| Housing Levy | 900.00 |
| Taxable pay | 53,850.00 |
| PAYE | 8,538.35 |
| Net pay | 45,311.65 |
Run your own numbers in the net salary calculator.
What employers must do
Employers deduct and remit these contributions monthly, by the 9th of the following month for SHIF and PAYE, and within the deadlines set for NSSF and the Housing Levy, with penalties for late payment. If your payslip shows a deduction but your NSSF statement does not show the contribution, raise it with HR and then NSSF.
Why your take-home pay fell
If your net pay dropped in 2025 or 2026 without a pay cut, the likely reasons are the NSSF increases each February (the employee maximum rose from KSh 4,320 to KSh 6,480 in February 2026) and the switch from fixed NHIF bands to SHIF at 2.75% of gross pay, which costs more for most middle and higher earners. The tax-deductibility of SHIF and the Housing Levy softens the impact, but does not cancel it.
Checking that contributions reach your account
Deductions on a payslip do not guarantee that your employer paid them. Check your NSSF statement regularly; Business Radar explains how to get it by USSD, WhatsApp or email in its NSSF statement guide. You can also check your SHA membership and contribution status through the Social Health Authority’s channels. If contributions are missing, raise it with HR first, then with the fund.
Key takeaways
- NSSF: 6% up to KSh 108,000, matched by the employer.
- SHIF: 2.75% of gross pay, minimum KSh 300, no cap.
- Housing Levy: 1.5% of gross from you and 1.5% from your employer.
- All three are deducted before PAYE, which lowers your tax.
Frequently asked questions
How much is NSSF in 2026?
6% of pay up to KSh 108,000 from 1 February 2026, a maximum of KSh 6,480 for the employee and the same from the employer.
Is SHIF capped?
No. SHIF is 2.75% of gross pay with a minimum of KSh 300 and no maximum.
Is the Housing Levy refundable?
The Affordable Housing Act sets out how contributions are used and the benefits available to contributors; check the Affordable Housing Act and the Boma Yangu programme rules for current terms.
Do SHIF and the Housing Levy reduce my PAYE?
Yes. Since 27 December 2024 both are deducted before PAYE is calculated.
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