- TSC says changes in June 2026 PAYE deductions resulted from correcting a payroll system configuration.
- The commission attributed the adjustment to the implementation of tax exemptions under the Tax Laws (Amendment) Act, 2024.
- Teachers have been assured that the correction was necessary to ensure accurate tax computation going forward.
The Teachers Service Commission (TSC) has moved to explain the adjustment of Pay As You Earn deductions in the June 2026 payroll after concerns were raised by teachers over changes reflected in their payslips.
In a statement dated June 24, 2026, the commission said it had received concerns from employees regarding the PAYE deductions and clarified that the changes were linked to the correction of a payroll system configuration.
“The Teachers Service Commission (TSC) has received concerns, regarding adjustments to Pay As You Earn (PAYE) deductions reflected in the June 2026 payroll,” the statement reads.
TSC said the changes followed the enactment of Section 7 of the Tax Laws (Amendment) Act, 2024, which amended the Income Tax Act to exempt employee contributions to the Affordable Housing Levy and the Social Health Insurance Fund from income tax. KRA also issued guidance that AHL and SHIF contributions are deductible when determining taxable employment income.
According to the commission, the system administrator of the Integrated Personnel and Payroll Database reconfigured the payroll to apply the exemptions in line with the law.
“Following the enactment of Section 7 of the Tax Laws (Amendment) Act, 2024, which amended Section 15(2) of the Income Tax Act to exempt employee contributions to Affordable Housing Levy (AHL) Fund and the Social Health Insurance Fund (SHIF) from income tax, the System Administrator of the Integrated Personnel and Payroll Database (IPPD) reconfigured the payroll system to implement the tax exemptions in compliance with the law and for the benefit of TSC employees,” TSC stated.
Anomaly affected NSSF relief
The commission said that during the reconfiguration, an unintended anomaly occurred when NSSF contributions, which had already been configured as tax-exempt in the payroll system, were inadvertently recaptured for tax relief purposes.
“During the system reconfiguration process, an unintended anomaly occurred whereby, in addition to AHL and SHIF contributions, National Social Security Fund (NSSF) contributions which had already been configured as tax-exempt in the payroll system were inadvertently re-captured for tax relief purposes,” the commission said.
TSC added that this led to duplicate tax relief on NSSF contributions for all its employees.
“This resulted in the application of a duplicate tax relief on NSSF contribution for all TSC employees,” the statement noted.
Corrective action taken
The commission said the anomaly was identified through routine payroll reviews and corrective action was taken in the June payroll for both teachers and secretariat staff.
“Through its routine payroll system reviews, the Commission identified the anomaly and immediately took corrective action in the June 2026 payroll for both Teachers and Secretariat,” TSC said.
“Consequently, the PAYE deductions were adjusted to align with the correct tax computation as provided for under the law,” the statement added.
TSC clarified that the adjustment was necessary to ensure accurate PAYE deductions going forward.
“The Commission wishes to clarify that the PAYE adjustment reflected in the June 2026 payroll arose from the correction of the payroll system configuration and was necessary to ensure accurate computation of Pay As You Earn deductions going forward,” the commission said.
Background
PAYE is the income tax deducted by employers from employees’ salaries and remitted to the Kenya Revenue Authority.
Changes introduced under the Tax Laws (Amendment) Act, 2024 made employee contributions to SHIF and the Affordable Housing Levy deductible in computing taxable employment income, shifting how payroll systems calculate tax from December 2024 onward.
The adjustment comes at a time when statutory deductions, including SHIF, AHL and NSSF, remain a sensitive issue for workers due to their direct effect on take-home pay.
NSSF contributions have also been undergoing phased implementation under the NSSF Act, with employers required to deduct and match contributions.
The commission apologised to teachers and staff affected by the concerns arising from the payroll changes.
“The Commission regrets any inconvenience or concern that this adjustment may have caused to TSC employees and appreciates their understanding,” the statement concluded.
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The statement was signed by Ms Evaleen Mitei, acting Commission Secretary and Chief Executive.
By Joseph Mambili
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