The Kenya Revenue Authority (KRA) has unveiled draft tax regulations that could significantly change how landlords and employers are taxed, in a move aimed at tightening compliance while encouraging job creation.
In a notice dated April 29, 2026, KRA proposed amendments to the Draft Income Tax (Residential Rental Income Tax) Regulations, 2026, alongside new provisions under the Draft Income Tax (Set Off Tax Rebate for Graduate Apprenticeships) Regulations.
The proposed changes signal a tougher stance on rental income, with the taxman seeking to seal loopholes that have allowed widespread under-declaration by property owners.
Currently, landlords earning between KSh288,000 and KSh15 million annually are required to pay a monthly residential rental income tax at a rate of 7.5 per cent on gross rent. However, KRA now plans to strengthen enforcement through enhanced digital monitoring systems and improved data matching to better track rental earnings.
The move is expected to bring more landlords into the tax net and boost government revenue, at a time when authorities are under pressure to increase collections without raising tax rates.
At the same time, the tax authority is proposing incentives aimed at addressing youth unemployment through the private sector.
Under the draft graduate apprenticeship regulations, employers will be allowed to offset part of their tax obligations against costs incurred in training fresh graduates. The incentive is designed to encourage companies to hire and mentor young professionals, many of whom struggle to secure work after completing their studies.
The dual approach tightening tax compliance while offering relief to employers reflects a broader policy shift by the government to balance revenue collection with economic support measures.
KRA has invited members of the public, businesses, and stakeholders to submit their views on the proposed regulations before May 25, 2026.
“Your voice matters. We want to hear from you before finalising the new Residential Rental Income Tax Regulations and the Graduate Apprenticeship Tax Rebate rules,” the authority said.
Kenyans can submit their feedback through KRA’s stakeholder engagement platform via email at stakeholder.engagements@kra.go.ke.
If adopted, the new measures could reshape Kenya’s rental market while also opening up opportunities for graduates seeking entry into the job market.
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