TSC Set to Close September Payroll Today as Teachers Await PAYE Relief Verdict
The Teachers Service Commission (TSC) is on course to close the September 2026 payroll cycle today, September 16, a routine but critical administrative milestone that ensures teachers across the country receive their salaries and Sacco remittances in good time.
According to the Commission’s payroll schedule, teachers should expect to see their salaries reflected in their bank and Sacco accounts by Friday this week, bringing to a close another month of service delivery in the education sector.
While the payroll closure itself is a matter of routine, it comes against the backdrop of a much bigger conversation that has captured the attention of salaried Kenyans, teachers included: the long-promised review of Pay As You Earn (PAYE) tax bands by the National Treasury.
This review, which many low- and middle-income earners had hoped would materialize in September, has now been pushed to October 2026, extending a wait that has already stretched across several months of promises, directives, and shifting timelines.
The PAYE Promise and the Latest Delay
Treasury Cabinet Secretary John Mbadi had earlier committed to reviewing PAYE tax relief for salaried Kenyans earning Ksh30,000 per month and below, with an initial target of implementing the changes in September 2026.
That timeline, however, has now slipped to October, marking yet another postponement in a process that has been closely watched by millions of workers hoping for a reprieve from the current tax burden.
Mbadi had previously indicated that Treasury intended to table a Bill in Parliament specifically to trigger the review of the PAYE bands.
Speaking on Tuesday, September 15, the Treasury CS explained that before any such Bill could be presented, the government would first need to conduct public participation, a constitutional requirement that he was not willing to bypass despite the mounting pressure to deliver on the promised relief.
“It is coming. I will do the public participation first. Kenya has become what it is because of the Constitution that we have. If I bring them without public participation, someone might go to court to stop it. Sometimes it can be very discomforting,” Mbadi stated, underscoring his cautious approach to a process that, if mishandled procedurally, could easily be challenged in court and delayed even further.
Mbadi attributed the latest postponement to a busy September schedule, which included planned foreign travel that made it difficult to complete the public participation exercise within the month.
“This month is a bit crowded. I will do it immediately in the first week of October,” he said, signaling that the process would kick off as soon as the new month begins.
Part of that crowded schedule includes Mbadi’s expected attendance at the International Monetary Fund (IMF) and World Bank Annual Meetings, an engagement that appears to have been factored into the government’s broader communication timeline for the proposed tax reforms.
Mbadi indicated that he intended to initiate the public participation process, travel for the international meetings, and then return to conclude the exercise before the Bill is finally taken through the National Assembly.
“I will break it when I am going for the spring meeting, then come back and conclude it, then we process the Bill through the National Assembly,” Mbadi said, laying out what amounts to a multi-step process that will likely stretch the timeline for actual implementation well beyond the initial expectations that many taxpayers had held onto since the proposal was first floated.
What the Proposed Changes Would Mean
Under the earlier proposals put forward by the government, employees earning up to Ksh30,000 per month would be fully exempted from PAYE, effectively removing a tax burden that currently eats into the earnings of some of the lowest-paid formal sector workers in the country.
Meanwhile, those earning between Ksh30,000 and Ksh50,000 would have their PAYE rate reduced to 25 per cent, a move designed to ease the tax load on lower-middle-income earners without eliminating their tax obligation entirely.
If these changes are eventually approved by Parliament, they could reduce PAYE deductions for more than 3.4 million salaried workers across the country, a figure that highlights just how far-reaching this reform could be.
It would not be a narrow, sector-specific adjustment but rather a broad-based relief measure touching workers across government, private industry, and parastatals, including a substantial number of civil servants and teachers.
However, before any of these proposals can be presented to Parliament for debate and eventual approval, Treasury is required by law to engage the public as part of the legislative process.
This is the very step that Mbadi has now pushed to the first week of October, a delay he insists is necessary to avoid legal challenges that could derail the entire initiative.
A History of Shifting Timelines
This is not the first time the PAYE relief measures have faced delays. The government had initially promised to include these relief measures in the 2026 Finance Bill, a move that would have given the proposals the force of law much earlier in the year.
However, when the Finance Bill was eventually enacted into law, the PAYE relief proposals were conspicuously absent, an omission that raised serious questions at the time about the government’s actual commitment to following through on its promises.
The exclusion of the PAYE relief from the Finance Bill prompted concern among taxpayers and analysts alike, with many wondering whether the proposal had quietly been shelved altogether.
It was only after President William Ruto stepped in and directed Treasury to develop concrete proposals to reduce PAYE deductions for workers, as part of broader measures aimed at increasing their take-home pay, that the initiative was revived with renewed urgency.
The presidential directive was specific: it called for exempting workers earning below Ksh30,000 from PAYE altogether and reducing the tax rate to 25 per cent for those earning below Ksh50,000.
Following this directive, Mbadi committed to having the proposals submitted to Parliament by September, a deadline that has now come and gone without the Bill materializing, pushing the entire process into October instead.
This pattern of promises followed by delays has understandably bred a degree of skepticism among workers who have been waiting for tangible relief.
Many salaried Kenyans, including teachers, have grown accustomed to hearing announcements about tax reforms that take considerably longer to materialize than initially communicated, if they materialize at all in their originally proposed form.
The Ripple Effect on Teachers, Especially in Lower Job Groups
For teachers, particularly those in the lower job groups, the stakes attached to this PAYE review are significant. Looking at the current Phase 2 salary conversion tables effective July 1, 2026, it becomes clear just how many teachers fall within the income bracket that would be directly affected by the proposed changes.
Teachers in Grade B5 (Primary Teacher II, T-Scale 5) currently earn basic salaries ranging from Ksh26,225 at the lowest salary point to Ksh31,615 at salary point five, with further extended scale updates beyond that.
A teacher at the lower end of this scale, earning below Ksh30,000, would stand to benefit from a full PAYE exemption under the proposed reforms, while those slightly above that threshold would fall into the reduced 25 per cent bracket.
Teachers in Grade C1 (Secondary Teacher III, Lecturer III, Primary Teacher I, T-Scale 6) earn between Ksh32,561 and Ksh38,900 across the documented salary points, placing the majority of these teachers squarely within the Ksh30,000 to Ksh50,000 bracket that would benefit from the reduced 25 per cent PAYE rate.
Similarly, teachers in Grade C2 (Secondary Teacher II, Lecturer II, Special Needs Teacher – Primary, Senior Teacher II, T-Scale 7), whose salaries range from Ksh40,954 to Ksh49,100, would also fall within this same relief bracket, meaning a substantial cross-section of teachers in these three grades stand to see a meaningful reduction in their tax deductions once the reforms take effect.
This is no small matter for teachers in these categories. A reduction in PAYE deductions translates directly into higher net pay, money that lands in their pockets every month without requiring any change in their gross salary.
For teachers already navigating the pressures of a challenging economic environment, this additional take-home pay could make a tangible difference in their day-to-day financial circumstances.
Cushioning Against the Cost of Living
The timing of this potential relief is particularly significant given the current economic climate. Many Kenyan households, teachers included, have been grappling with a sustained rise in the cost of living, driven in large part by elevated food and fuel prices.
These pressures have squeezed household budgets across the country, making even modest increases in disposable income a welcome relief for many families.
For teachers in Grades B5, C1, and C2, whose basic salaries already place them among the more modestly compensated members of the teaching profession compared to their counterparts in senior administrative and leadership positions, any additional room in their monthly budgets from reduced tax deductions would be especially impactful.
It would mean more money available for basic household needs, from groceries to fuel for commuting, at a time when both these expense categories have been trending upward.
Beyond the immediate day-to-day relief, an increase in net pay would also have longer-term implications for these teachers’ financial planning and stability.
With more disposable income, teachers would have greater flexibility to manage recurring expenses, save for future needs, or address financial obligations that have become increasingly difficult to meet given the current cost pressures.
Boosting Borrowing Power
Another important dimension of this potential PAYE relief is its effect on teachers’ borrowing capacity. Commercial banks and Saccos typically base their lending limits on a borrower’s verified net income, meaning that any increase in take-home pay directly expands the amount a teacher can qualify to borrow.
For many teachers, access to credit through commercial banks and teacher-focused Saccos is an essential financial tool, whether for personal development, home improvement, education expenses for their children, or other pressing financial needs.
An increase in net pay resulting from reduced PAYE deductions would effectively raise the ceiling on how much these teachers can borrow, giving them greater financial flexibility and access to credit facilities that might currently be out of reach given their existing net income levels.
This aspect of the reform is likely to be particularly welcomed by teachers in the lower job groups, many of whom rely on Sacco loans and bank facilities to finance significant life expenses.
A boost in borrowing power, driven by higher net pay, could open up opportunities that were previously constrained by lower disposable income, further amplifying the practical benefits of the proposed PAYE changes beyond just the immediate increase in monthly earnings.
The Waiting Game Continues
As things currently stand, the September payroll will proceed as scheduled, with the TSC closing the cycle today and teachers expected to see their salaries and Sacco deductions reflected in their accounts by Friday.
This routine process will continue uninterrupted, regardless of the ongoing developments at the Treasury regarding PAYE reform.
However, for many teachers, particularly those in the lower job groups who stand to benefit most from the proposed tax relief, the bigger and more consequential story remains the fate of the PAYE review.
With the process now pushed to October, and with public participation, parliamentary processing, and eventual implementation all still ahead, teachers may need to exercise continued patience before they see any actual change reflected in their payslips.
Given the history of delays that has characterized this particular reform, from its exclusion from the 2026 Finance Bill to the more recent shift from September to October, many teachers and other salaried Kenyans are likely to adopt a cautious, wait-and-see approach rather than banking on the relief materializing exactly as promised.
Still, the potential benefits, ranging from immediate cushioning against the high cost of living to improved access to credit, remain significant enough that many will continue to closely follow developments at the Treasury in the weeks ahead, hoping that the first week of October truly does mark the beginning of a process that finally delivers the long-awaited PAYE relief.