Kenya: KRA Explains Who Qualifies for Tax-Free Gratuity Under New Rules

The Kenya Revenue Authority (KRA) has clarified the conditions employees must meet to receive gratuity without paying income tax under the Finance Act 2026.

Under the law, the employment contract must run for at least three continuous years or be an extension of a three-year contract.

The gratuity must also not exceed 31 per cent of the employee’s emoluments earned during the contract period.

Employees who satisfy both conditions can receive qualifying gratuity without income tax.