Payroll Management System for Kenyan businesses by Wagemaster helps automate payroll, calculate PAYE, SHIF, NSSF and Housing Levy, generate payslips and support statutory compliance.
In Kenya, the right payroll software ensures that key statutory deductions, including PAYE, SHIF, NSSF, and the Affordable Housing Levy, are accurately calculated, applied in the correct sequence and processed in line with current statutory requirements.
Payroll software from Wagemaster is a full-featured, easy-to-use and flexible payroll software designed for Kenyan businesses. It gives you complete control to run payroll exactly the way you need with accuracy, automation and full statutory compliance.
Trusted by Businesses Across Kenya
As the best payroll software in Kenya, Wagemaster is trusted by over 1,000 organizations. Whether you run a small business or a large enterprise, Wagemaster adapts to your unique requirements.
Statutory Deductions in Kenya: The 2026 Framework
The Kenyan payroll landscape is defined by four primary statutory deductions, each with its own rules, rates, and compliance deadlines, which are typically due by the 9th of the following month.
1. PAYE (Pay As You Earn)
PAYE is the progressive income tax on employment income. Under the current structure, rates range from 10% to 35%. The lower bands apply to monthly incomes up to KES 24,000 (10%), KES 24,001 to KES 32,333 (25%), and KES 32,334 to KES 500,000 (30%). Higher income is taxed at 32.5% and 35%.
According to payroll specialists, the system must “apply the current PAYE bands, personal relief, SHIF, the Housing Levy and NSSF correctly, and as pre-tax deductions where the law requires.” A personal relief of KES 2,400 per month is applied to reduce the final PAYE liability.
2. SHIF (Social Health Insurance Fund)
SHIF replaced the old NHIF on 1 October 2024 under the Social Health Insurance Act, 2023. According to industry experts, “the transition from the old National Hospital Insurance Fund (NHIF) bracket system to the Social Health Insurance Fund (SHIF) under the Social Health Authority (SHA) represents a major structural shift. Instead of flat, tiered brackets maxing out at KES 1,700, SHIF demands a flat 2.75% deduction from each employee’s gross monthly salary, with absolutely no upper limit.”
Employee contribution: 2.75% of gross salary with a minimum of KES 300. Employer contribution: an additional 1.375% of gross salary (this did not exist under NHIF). If your payroll software is still using the old NHIF tiered table, it is producing incorrect figures and creating compliance risk with the Social Health Authority.
3. NSSF (National Social Security Fund)
Under the NSSF Act, 2013, contributions follow a two-tier system. Effective 1 February 2026, the lower earnings limit (Tier I) is KES 9,000, and the upper limit (Tier II) is KES 108,000. The contribution rate is 6% each for employee and employer on both tiers.
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Tier I: 6% of KES 9,000 = KES 540 each (total KES 1,080)
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Tier II: 6% of KES 99,000 (the difference between KES 108,000 and KES 9,000) = KES 5,940 each (total KES 11,880)
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Maximum total contribution: KES 12,960 per month
According to payroll experts, “February 2026 isn’t just another month on the calendar — it marks Year 4 of the NSSF transition, the final phase under the NSSF Act No. 45 of 2013. For employers and payroll teams, this means new limits, higher contributions, tighter compliance, and absolutely no room for error.”
4. Affordable Housing Levy
Introduced under the Affordable Housing Act, 2024, this requires 1.5% employee contribution and 1.5% employer contribution on gross monthly salary. It is remitted through KRA’s iTax portal alongside PAYE, and late payment attracts a 3% monthly penalty.
The Payroll Software Kenya Businesses Need for Accurate, Compliant and Efficient Payroll
To process payroll in Kenya, you need the best tools at hand. Wagemaster payroll packs all the features you need to run your payroll conveniently and accurately, with the ability to customize every aspect of the computations and reporting.
01
Define Your Own Earnings and Deductions
Wagemaster payroll software allows you to define custom earnings and deductions to match your business requirements, including allowances, benefits and loan repayments.
02
Structure Company into Departments
Wagemaster payroll software helps you organize employees and payroll costs by department for easier tracking and reporting.
03
Real Time Tax Calculations
Wagemaster payroll software calculates PAYE, SHIF, NSSF and Housing Levy deductions to support accurate payroll processing.
04
Direct Email for Payslips and P9A Forms
Send payslips and P9A forms directly to employees using payroll software designed for efficient payroll communication.
05
Statutory Returns Uploading
Prepare monthly NSSF, SHIF, Housing Levy and PAYE returns with payroll software that simplifies statutory compliance.
06
Permanent and Casual Staff
Wagemaster payroll software supports both permanent employees and casual staff with flexible payment structures.
07
Monthly and Weekly Payroll
Process monthly and weekly payments with payroll software that adapts to your business payment schedule.
08
Import Earnings from Excel
Import earnings directly from Excel into your payroll software to reduce manual data entry and improve accuracy.
09
Multi Currency Postings and Reporting
Wagemaster payroll software supports multi currency postings and reporting for businesses with international operations.
10
Timesheet Posting with Project Allocation
Post timesheets and allocate employee costs to projects directly through your payroll software.
11
Bank Transfer Reports and Export Files
Generate bank transfer reports and export files using payroll software for easier and more accurate salary payments.
12
Custom Report Generator
Create customized reports with payroll software that gives you better insight into your payroll data.
13
Protect Data with Multi Level Passwords
Protect sensitive employee information with secure payroll software that supports multi level passwords and controlled user access.
Frequently Asked Questions About Payroll Software
Find answers to common questions about payroll software, statutory deductions, payroll compliance and how Wagemaster payroll software supports businesses in Kenya.
Choose the Right Payroll Software for Your Business
Managing payroll accurately is essential for every growing business. The right payroll software helps automate salary processing, calculate statutory deductions, manage employee records, generate reports and reduce the risk of costly payroll errors.
From PAYE, SHIF, NSSF and the Affordable Housing Levy to payslips, P9A forms, bank transfer files and custom reporting, reliable payroll software gives your business greater accuracy, compliance and control.
Wagemaster is built to provide Kenyan businesses with flexible and dependable payroll software that adapts to different payroll structures and organizational requirements. Whether you manage a small team, a growing business or a large enterprise, Wagemaster payroll software helps simplify payroll processing while supporting accurate calculations and statutory compliance.
If you are looking for payroll software that can grow with your organization, automate complex payroll processes and give you greater control over your payroll data, Wagemaster provides the tools you need to manage payroll with confidence.
Ready to Simplify Your Payroll?
Talk to our team and discover how Wagemaster payroll software can help your organization process payroll accurately, manage statutory deductions and simplify payroll administration.
Get in Touch
Phone: +254 722 718 373
Email: [email protected]
Website: www.wagemaster.co.ke
