A tax incentive is a reduction made by the government in the amount of tax that a taxpayer should pay. One of the major tax incentive in Kenya is the personal monthly relief of 2,400

1. Tax incentives for individuals Include:
Personal relief for Resident Individuals :– Sh. 2,400 per month (28,800 per annum);

2. Relief on premiums paid for Life, Education and Health policy for Resident Individuals:- 15% of premiums paid
subject to a maximum of Shs. 60,000/= per annum;
Note:
Life or education policies – whose term commences on or after 1st January, 2003.
Health policy whose term commences on or after 1st January, 2007.

3. Employees contribution to registered defined benefit fund or defined contribution fund– maximum Kshs. 20,000/=
per month;

4. Relief/deduction of interest paid on Mortgage for owner-occupied properties, subject to a maximum of Kshs.
300,000/- per year;

5. Relief/deduction on funds deposited under a Registered Home Ownership Savings Plan, subject to a maximum of
Kshs. 96,000 per year;

6. Where employer pays gratuity into a registered pension scheme instead of paying the gratuity to the employee, the tax
exempt amount is Ksh. 240,000/= per annum;

7. Tax-free amount on retirement is Kshs. 600,000 w.e.f. 1st January, 2010;

8. Annual pension is tax-free up to a maximum of Kshs. 300,000/- or Kshs. 25,000/- per month;

9. Monthly or lump sum pension granted to a person who is sixty five (65) years or more is exempt from tax w.e.f. 13th
June, 2008.

10. The End