Gross-to-Net: What Employers Don't Tell You About Your Offer Letter

That KSh 150,000 monthly salary in your offer letter won't hit your account. The difference between what employers advertise and what you actually earn is the gap nobody explains until you've already accepted the job.

The culprit is straightforward: payroll deductions. Kenya's tax system, combined with statutory contributions and occasional employer deductions, means your gross salary shrinks before you see it. Most job seekers don't ask about this during interviews—and most employers don't volunteer the math.

The Deductions That Matter

PAYE (Pay As You Earn) is the largest bite. The Kenya Revenue Authority applies progressive tax rates that start at 10% on earnings above KSh 24,000 per month. If you earn KSh 150,000, you're paying roughly 30% in income tax, not 10%. That same KSh 150,000 gross becomes closer to KSh 105,000 net—and that's before anything else leaves your payslip.

National Social Security Fund (NSSF) contributions come next. Employees contribute 6% of gross salary (capped at KSh 18,000 per month as of 2026). That's another KSh 9,000 from your KSh 150,000 example. The employer also contributes, but that money never reaches your account.

Health insurance through NHIF follows the same pattern. Contributions scale with your salary—typically around 2.75% to 3.75% of gross earnings. For KSh 150,000, expect KSh 4,000 to KSh 5,600 monthly.

Some employers add housing levies (15% to the National Housing Development Fund up to a set limit), union dues, or mobile phone deductions. Others deduct loan repayments, insurance premiums, or savings schemes directly from your payslip without clear explanation.

The Math Nobody Shows You

Take a realistic example: you accept an offer for KSh 200,000 gross monthly.

• PAYE: approximately KSh 38,000
• NSSF (6%): KSh 12,000
• NHIF (3%): KSh 6,000
• Housing levy (if applicable): KSh 3,000
• Your net: approximately KSh 141,000

That's a 29% reduction from your advertised salary. Your employer quoted you the gross number. Your bank account sees the net.

Use a Kenya net salary calculator to see your actual take-home before signing anything. Better yet, ask your employer's HR team to provide a sample payslip showing all deductions for your proposed salary. Most won't do this unprompted, but it's a reasonable request—and their reluctance is a red flag.

What You Can Control

PAYE, NSSF, and NHIF are mandatory—you cannot opt out. But some deductions are discretionary. Before accepting any offer, clarify what's optional: union dues, mobile phone allowances, pension schemes, or savings plans.

If you're self-employed or running a side business alongside employment, your tax position becomes more complex. PAYE experts can help you file correctly and avoid overpaying. The Kenya Revenue Authority publishes tax brackets on itax.kra.go.ke, but most people never check them.

One practical step: request a detailed offer letter that separates gross salary, allowances, benefits, and deductions. Some employers list everything clearly. Others give you a single number and expect you to figure out the rest. If they won't provide the breakdown, that's information in itself.

Your first paycheck will be a shock if you didn't do this homework. The second will be less of a shock. The third will make you wonder if you've been overpaying tax the whole time. Asking upfront prevents all three.

Frequently Asked Questions

Can I reduce my PAYE by claiming dependents or reliefs?

Yes. The KRA allows personal relief of KSh 2,400 monthly (as of 2026), and additional relief for spouse and children. You claim these on your PIN through the iTax portal at itax.kra.go.ke. If your employer hasn't applied these, you may be owed a refund. Employment law experts can advise if your employer is withholding relief incorrectly.

Why does my payslip show different amounts each month?

Variable deductions: overtime, bonuses, or benefits like housing allowance change month to month. Tax also recalculates based on your cumulative earnings for the year. NSSF contributions have a monthly cap, so high earners see that line item stabilize after certain months.

Can my employer deduct money for uniform or training without asking?

No. The Employment Act requires employer consent for deductions beyond statutory taxes and contributions. If your payslip includes unauthorized deductions, raise it with HR in writing. Keep copies of all payslips.

How do I check if I'm paying the correct PAYE amount?

Use a free PAYE calculator to cross-check your payslip against the current tax tables. If the numbers don't match, contact your HR or payroll team. Persistent discrepancies should be reported to the KRA.