The Finance Bill 2025 was laid before Parliament this April and as always it comes with big policy changes that affect how much Kenyans earn, spend and invest. The bill is still under debate but here’s what you need to know about the most important changes and how they will affect your daily life.
1. VAT on Digital Services to Go Up from 16% to 18%
If passed the bill proposes VAT on digital services to go up from 16% to 18%. This affects:
Streaming (Netflix, Spotify, Showmax)
Online ads (Google, Facebook, TikTok)
Software subscriptions (e.g. Microsoft 365, Canva)
Impact: Expect higher monthly charges for your favorite digital platforms. Businesses running online ads will also feel the pinch.
2. New Excise Duty on Mobile Money Transfers
The bill proposes 20% excise duty on mobile money transfers up from 15%.
Impact: Sending money via M-Pesa, Airtel Money and T-Kash will be more expensive. This hits low-income earners and SMEs that rely on mobile payments.
3. Annual Property Tax for Urban Homes
For the first time the national government is proposing annual property tax on residential homes in urban areas—on top of county land rates.
Rate proposed: 0.3% of property value annually
Affects: Landlords, homeowners in Nairobi, Mombasa, Kisumu etc.
Impact: Rent could go up and landlords will have to factor in new compliance paperwork.
4. PAYE Brackets Adjusted
To align with inflation and revenue needs, PAYE (Pay As You Earn) tax bands are set to change:
| Monthly Income | Current Rate | Proposed Rate |
|---|---|---|
| Up to KES 24,000 | 10% | 10% |
| KES 24,001–50,000 | 25% | 27.5% |
| Above KES 50,000 | 30% | 35% |
Impact: Middle- and high-income earners will pay more, while low earners remain unaffected.
5. Eco Tax on Vehicles Over 10 Years Old
To encourage environmental responsibility the bill introduces KES 20,000 eco tax per year on private vehicles older than 10 years.
Impact: This will increase costs for car owners who rely on used imports especially in lower- to mid-income categories.
6. Taxes on Influencers and Digital Content Creators
Influencers, YouTubers and TikTokers will be required to declare income from brand deals and monetized content. KRA plans to use digital tracking tools to enforce this.
Impact: Side hustlers and online creators will have to file returns or face penalties.
7. SME Relief Measures
Not all is bad news. The bill has proposed relief for small businesses:
30% reduction in turnover tax for annual sales below KES 1 million
Faster VAT refunds for SMEs
Impact: Small traders, freelancers and jua kali businesses will benefit.
What Next?
Public participation hearings will be held May-June
Parliament must approve it by June 30, 2025 for it to take effect July 1, 2025
Changes can still be made before it’s passed into law
What to Do Now?
- Review your personal or business finances to prepare for any tax increases
- If you’re a content creator or freelancer, start keeping better income records
- Landlords should plan for possible property tax compliance
- Stay informed: Follow updates from the National Treasury and KRA
In Brief
The Finance Bill 2025 affects almost every Kenyan—from how we pay taxes to how we live, work and spend. Whether you’re a business owner, salaried employee or student, knowing these changes helps you prepare and adapt.