No New Taxes in 2025? Treasury CS John Mbadi Says ‘Enough Is Enough’
In a rare moment of fiscal relief, Treasury Cabinet Secretary John Mbadi has given Kenyans something to breathe easy about: no new tax hikes in the upcoming Finance Bill 2025.
Yes, you read that right – no adjustments to Value Added Tax (VAT), employment taxes, or other key levies.
Speaking candidly with the Bunge la Wananchi caucus in Nairobi on February 3, Mbadi made it clear – the government has hit its taxation ceiling.
“We cannot overtax Kenyans anymore,” he declared. “There’s no more room for additional taxes, especially on employment income. Not under my watch.”
This announcement comes as a small but notable relief for many Kenyans already grappling with multiple deductions – from the Social Health Insurance Fund to the Affordable Housing Levy and other statutory contributions that chip away at take-home pay.
Speaking of the Affordable Housing Levy…
Let’s not forget that back in October 2023, the government secured court approval to enforce the 1.5% levy on gross salaries, with employers matching that amount – bringing the total deduction to 3%.
So while Mbadi’s declaration might ease fears of new taxes, the deductions already in place aren’t going anywhere.
Pension Funds Get a Break
On the bright side, Mbadi is also championing an amendment to the Pensions Fund Act, aiming to exempt pension savings from taxation.
His reasoning? A mix of personal and public interest:
“When I retire, I’d like to receive my pension in full – without surrendering a chunk of it to taxes. And I believe every Kenyan deserves the same.”
This move isn’t just about lightening the tax load.
It’s also designed to encourage a savings culture and offer better protection for retirees.
What This Means for You
While there’s no promise of tax reductions, the fact that the government is pressing pause on new tax hikes is significant.
It reflects growing recognition of the financial strain many Kenyans face.
But here’s the kicker: no new taxes doesn’t mean no existing burdens.
Deductions for health insurance, housing, and pensions will still apply. The real question is – will these measures be enough to ease the cost of living?