New Finance Law brings tax relief for workers, retirees, and home builders

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Kenyans can now enjoy more money in their pockets and better financial protection after President William Ruto signed the Finance Bill 2025 into law on Thursday.

The new law, which takes effect from July 1, 2025, offers several benefits for ordinary citizens, especially salaried workers, retirees, and those building their homes.

Unlike previous finance laws that raised taxes, this one focuses more on improving tax collection systems without hurting the mwananchi.

Key Benefits to Kenyans are explained hereunder.

Bigger Allowances for Work Travel

If you travel for work, you can now receive up to Sh10,000 per day as tax-free per diem.

This is a huge jump from the old Sh2,000 limit and will boost many public servants and private employees working outside their home stations.

Retirement Pay Now Tax-Free

Kenyans who are retiring will now receive their lumpsum pension or gratuity without any tax deductions.

This includes money paid through NSSF or private retirement schemes.

More Relief for Home Builders

If you are building or buying a home using a loan--even from a SACCO or microfinance institution--you can now enjoy automatic mortgage interest relief.

Previously, only bank mortgages qualified.

Privacy and Data Protection Improved

In a major win for civil rights, the law removes a controversial clause that would have allowed the Kenya Revenue Authority (KRA) to access your bank or mobile money records without a court order.

Now, KRA must first get approval from a judge, protecting your financial privacy.

Digital Workers and Companies

Foreign digital companies and freelancers working online will be taxed on their income generated from Kenya. This includes streaming services, e-learning platforms, and software providers—ensuring fair competition with local businesses.

Support for Investors and Startups

The law also offers incentives for companies operating in special economic zones and the Nairobi International Financial Centre (NIFC).

These businesses will enjoy reduced tax rates, aiming to attract more investors and create jobs.

The Finance Law 2025 aims to raise about Sh30 billion by sealing tax loopholes--not by increasing what people pay. While protests have erupted over broader economic frustrations, this law shows a shift toward fairer and smarter taxation.

Stay with AVDelta News for simplified updates on how the new law will affect your salary, business, and everyday life.