13 June 2026
Rental income tax in Kenya 2026 is one of the most searched — and most incorrectly reported — topics connected to the Finance Bill 2026. Almost every article published in May and June 2026 says the residential rental income tax is going up to 10%. Most of those articles are describing a proposal that has since been withdrawn. Here is what the Finance Bill 2026 actually says, what has been dropped, what still applies to Kenyan landlords, and how to calculate exactly what you owe from July 1.
Table of Contents
- Rental Income Tax Kenya 2026 — What the Law Currently Says
- What Finance Bill 2026 Originally Proposed — and What Was Dropped
- What DID Change — The Non-Resident Landlord Tax
- How to Calculate Rental Income Tax in Kenya 2026
- Rental Income Tax Table — What You Owe at Every Income Level
- KRA Compliance for Landlords — What to Do Before June 30
- Frequently Asked Questions
Rental Income Tax Kenya 2026 — What the Law Currently Says
The rental income tax in Kenya 2026 is governed by the Monthly Rental Income (MRI) tax regime, introduced under the Finance Act 2015 and amended several times since. Here is exactly how it works under the current law — before any Finance Bill 2026 changes.
The current rate: 7.5% of gross monthly rental income, applied as a flat rate with no deductions for expenses. This rate was reduced from 10% to 7.5% by the Finance Act 2023, taking effect from January 2024.
Who it applies to:
- Kenyan resident landlords earning rental income from residential property
- Annual gross rental income between KES 288,000 and KES 15 million
- Below KES 288,000/year (KES 24,000/month): standard PAYE income tax bands apply instead
- Above KES 15 million/year: normal corporate or individual income tax with deductions allowed
This is a final tax. You pay 7.5% of gross rent collected — not of profit, not of rent minus expenses. If you collect KES 60,000 in rent and spend KES 20,000 on maintenance and management fees, your MRI tax is still calculated on the full KES 60,000.
Payment deadline: By the 20th of the month following the month the rent was received. For rent collected in May 2026, the MRI tax is due by June 20, 2026. File on rent received, not rent invoiced.
This simplified regime means most residential landlords file monthly via iTax using the dedicated MRI return — not the standard IT1 annual return used for employment income.
What Finance Bill 2026 Originally Proposed — and What Was Dropped
Here is the fact most articles are getting wrong.
The Finance Bill 2026 as originally tabled on April 30, 2026 proposed increasing the residential rental income tax from 7.5% to 10% under paragraph 10 of the Third Schedule to the Income Tax Act. This increase would have reversed the Finance Act 2023 reduction and returned the rate to where it stood from 2016 to 2023.
The proposal targeted resident landlords earning between KES 288,000 and KES 15 million annually — the core of Kenya’s residential rental market.
Then it was dropped.
Following scrutiny by stakeholders and the National Treasury, the Finance Bill 2026 underwent revisions. The proposal to increase residential rental income tax from 7.5% to 10% was officially withdrawn from the bill. The withdrawal of this proposal was among several contentious measures removed from Finance Bill 2026 following stakeholder pressure.
What this means for Kenyan resident landlords:
- Your rental income tax rate remains at 7.5% from July 1, 2026
- There is no increase to 10% for residential rental income
- The Finance Bill 2026, as amended, does not change the MRI rate for resident Kenyan landlords
This is the most important fact in this article — and the one most competing articles have wrong. If you are a Kenyan resident landlord and someone tells you your rental tax is going up to 10% in July 2026, show them this article.
Why the confusion persists: The 10% increase was in the original bill published April 30. Many articles were written between April 30 and the withdrawal — and those articles have not been updated. The withdrawal is confirmed but not yet widely covered. The original Cliffe Dekker Hofmeyr analysis from May 8, 2026, which is widely cited, describes the bill as originally tabled — before the withdrawal. Articles sourcing that analysis still show the 10% figure as current.
The IEA Kenya analysis explains the policy logic behind the reversal clearly: the Finance Act 2023 had cut the rate from 10% to 7.5% precisely to address the compliance failure caused by the higher rate — raising it back to 10% without solving the underlying compliance problem would recreate the same failure.
What DID Change — The Non-Resident Landlord Tax
While the resident landlord increase was dropped, a new provision for non-resident landlords remains in the Finance Bill 2026 and is expected to pass.
The Finance Bill 2026 introduces Section 6B of the Income Tax Act, creating a new simplified taxation framework for non-resident persons earning rental income from property in Kenya. The rate is 10% withholding tax on gross rental income — as a final tax.
Who this applies to:
- Foreign nationals who own property in Kenya and earn rental income
- Non-resident companies or trusts holding Kenyan property
- Any person not resident in Kenya for tax purposes who receives rental income from Kenyan property
Who this does NOT apply to:
- Kenyan citizens resident in Kenya
- Kenyan residents earning rental income regardless of property type
- Any landlord who is a tax resident of Kenya
The practical mechanics: Non-resident persons will be required to register and account for the tax under a simplified framework to be prescribed by the KRA Commissioner, and to submit returns and remit the tax by the 20th day of the month following the month for which the rent is paid. The provision does not apply where rental income is received through a resident agent and is subject to withholding tax under section 35(3)(j).
What this means in practice: Kenyan property management agents handling properties owned by non-residents may be required to withhold 10% of rental income before remitting the balance to the foreign owner. If you are a property manager with foreign-owned properties in your portfolio, review your contracts and withholding obligations.
For ordinary Kenyan landlords and their tenants, this provision makes no difference. It is targeted exclusively at non-resident property owners — a relatively small subset of the Kenyan rental market, primarily concentrated in premium Nairobi properties owned by diaspora investors or foreign nationals.
How to Calculate Rental Income Tax in Kenya 2026
The rental income tax calculation for Kenya 2026 is straightforward under the existing 7.5% rate. Here is the complete step-by-step process.
Step 1: Determine your annual gross rental income Add up all rent received across all your residential properties for the year. Use rent actually received, not rent invoiced or due. If a tenant paid six months late in December, all six months count as December income.
Step 2: Check which tax regime applies
- Below KES 288,000/year (KES 24,000/month): you are outside the MRI regime — use standard income tax with deductions
- KES 288,000 to KES 15 million/year: you are in the MRI regime at 7.5% flat rate
- Above KES 15 million/year: you file standard returns with deductions allowed
Step 3: Apply the 7.5% rate to gross income Monthly tax = Gross monthly rent × 0.075
There are no deductions for repairs, management fees, mortgage interest, insurance, or depreciation under the MRI regime. If your expenses are high enough that the annual regime would produce lower tax, you can opt out of MRI by writing to the KRA Commissioner — but for most landlords with moderate expenses, MRI is administratively simpler.
Step 4: File and pay by the 20th of the following month Log into iTax at itax.kra.go.ke, select Returns → File Return → Monthly Rental Income. Enter your gross rent for the month. The system calculates the tax. Pay via M-Pesa Paybill 222222 using your KRA PIN as the account number.
Worked example — KES 60,000/month rental income:
| Item | Calculation | Amount |
|---|---|---|
| Gross monthly rent | — | KES 60,000 |
| Annual gross rent | KES 60,000 × 12 | KES 720,000 |
| MRI tax rate | 7.5% | — |
| Annual MRI tax | KES 720,000 × 0.075 | KES 54,000 |
| Monthly MRI payment | KES 54,000 ÷ 12 | KES 4,500 |
| Payment due date | 20th of following month | e.g., June 20 for May rent |
The KES 4,500 monthly tax is paid from the gross rent. You keep KES 55,500 per month after tax before any expenses.
Rental Income Tax Table 2026 — What You Owe at Every Income Level
All figures below are calculated at the current 7.5% rate, which remains unchanged from July 1, 2026 for resident Kenyan landlords.
| Monthly rent received | Annual gross rent | Annual MRI tax (7.5%) | Monthly tax payment |
|---|---|---|---|
| KES 24,000 | KES 288,000 | KES 21,600 | KES 1,800 |
| KES 30,000 | KES 360,000 | KES 27,000 | KES 2,250 |
| KES 40,000 | KES 480,000 | KES 36,000 | KES 3,000 |
| KES 50,000 | KES 600,000 | KES 45,000 | KES 3,750 |
| KES 75,000 | KES 900,000 | KES 67,500 | KES 5,625 |
| KES 100,000 | KES 1,200,000 | KES 90,000 | KES 7,500 |
| KES 150,000 | KES 1,800,000 | KES 135,000 | KES 11,250 |
| KES 200,000 | KES 2,400,000 | KES 180,000 | KES 15,000 |
| KES 500,000 | KES 6,000,000 | KES 450,000 | KES 37,500 |
Note: These are the amounts of tax owed — your gross rent before deducting tax and any expenses. The MRI tax is a final tax — no additional income tax applies to this rental income, and you do not include it in your annual IT1 return alongside employment income.
Multiple properties: If you own multiple rental properties, all rental income is combined to determine which band applies. A landlord with three properties each earning KES 10,000/month has a combined rental income of KES 30,000/month (KES 360,000/year) — above the KES 288,000 threshold and therefore in the MRI regime.
KRA Compliance for Landlords — What to Do Before June 30
The KRA returns deadline is June 30, 2026 — and it applies to landlords as much as to salaried employees. Here is what you need to do before that date.
If you have been filing MRI monthly: Ensure all monthly MRI returns from January to May 2026 are filed and paid. Your June 2026 rent (received in June) will be due on July 20, 2026 — after the June 30 annual deadline, but the monthly obligation continues year-round regardless.
If you have NOT been filing MRI: File all outstanding monthly returns immediately. Each missed month has its own penalty: the higher of KES 2,000 or 5% of tax due, plus 1% monthly interest on the unpaid balance. The total exposure compounds quickly across multiple unfiled months.
The Finance Bill 2026 tax amnesty: The Finance Bill 2026 includes a tax amnesty provision for outstanding liabilities relating to periods up to December 31, 2025 — the amnesty expires December 31, 2026. If you have unfiled rental income tax from previous years, this amnesty may allow you to regularise your position at reduced penalty cost. Watch the KRA website at kra.go.ke for the official amnesty terms once the Finance Bill is enacted.
Which return to file: Use the Monthly Rental Income (MRI) return via iTax — not the standard IT1 income tax return — if your annual rental income falls between KES 288,000 and KES 15 million. Filing on the wrong return type can create reconciliation problems that trigger compliance queries from KRA.
For the full guide on what happens if you miss the June 30 deadline and how to file correctly, see our KRA returns deadline June 30, 2026 guide.
Frequently Asked Questions
Is rental income tax going up to 10% in Kenya in 2026? No — for resident Kenyan landlords. The Finance Bill 2026 originally proposed increasing residential rental income tax from 7.5% to 10%, but this proposal was withdrawn from the bill following stakeholder pressure. Kenyan resident landlords remain on the 7.5% rate from July 1, 2026. The 10% rate does apply to non-resident persons earning rental income from Kenyan property under a new provision in the Finance Bill 2026.
What is the rental income tax rate in Kenya 2026? The residential rental income tax rate in Kenya 2026 is 7.5% of gross monthly rental income, for resident landlords earning between KES 288,000 and KES 15 million annually. This rate has been in place since January 2024 (reduced from 10% by the Finance Act 2023) and is not changing from July 1, 2026 for residents.
How does Finance Bill 2026 affect rental income tax? For most Kenyan resident landlords, the Finance Bill 2026 has no direct effect on rental income tax — the proposed increase to 10% was dropped. The bill does introduce a new 10% withholding tax on rental income earned by non-resident persons (foreign nationals and overseas investors) from Kenyan property. It also includes a tax amnesty for outstanding KRA liabilities that may benefit landlords with unfiled past returns.
How do I calculate my rental income tax in Kenya 2026? Multiply your gross monthly rent by 7.5%. Pay by the 20th of the following month via iTax. For example: KES 50,000 monthly rent × 0.075 = KES 3,750 per month. No deductions for expenses are allowed under the MRI regime — the 7.5% applies to the full gross amount received.
Who pays the non-resident rental income tax under Finance Bill 2026? The 10% non-resident rental income tax under Finance Bill 2026 applies to foreign nationals, non-resident companies, or any person not tax-resident in Kenya who earns rental income from Kenyan property. It does not apply to Kenyan citizens or tax residents. Property management agents handling non-resident-owned properties may be required to withhold and remit the 10% on behalf of non-resident owners.
Do I need to include MRI rental income in my KRA annual return? No. Monthly Rental Income tax is a final tax — you pay it monthly through the MRI return, and it is not included in your annual IT1 income tax return alongside your employment or business income. The two regimes are separate. For a full explanation of all the returns you may need to file before June 30, 2026, see our KRA returns deadline guide.
The Bottom Line
Rental income tax in Kenya 2026 remains at 7.5% for resident Kenyan landlords — unchanged from the current law, unchanged from July 1, 2026. The Finance Bill 2026 proposal to raise it to 10% was withdrawn. If you have been reading articles saying it is going up, those articles are describing a draft that no longer reflects the final bill.
What is changing is the introduction of a 10% withholding tax on non-resident landlords — a new provision that formalises the taxation of foreign property owners in Kenya. If you manage properties on behalf of overseas investors, this provision deserves a close look.
What remains unchanged for the majority of Kenyan landlords is the compliance obligation: file your monthly MRI return by the 20th of every month, use the correct return type on iTax, and ensure your 2025 income is fully declared before the June 30, 2026 KRA annual deadline.
Understanding how your rental income tax interacts with your other income streams — employment income, business income, or investment income — is part of effective personal financial planning. Our how to budget in Kenya 2026 guidecovers how to plan your monthly cash flow around all your statutory obligations including MRI, PAYE, SHIF, and NSSF. And for a full view of how all Kenyan deductions interact at your salary level, use our Kenya PAYE Calculator 2026.
Rental income tax rate confirmed from KRA iTax portal, Pangoni MRI guide (March 2026), and Finance Act 2023. Finance Bill 2026 withdrawal of 10% rate increase confirmed from Kenya Times (June 2026). Non-resident landlord provision sourced from Cliffe Dekker Hofmeyr Finance Bill 2026 analysis (May 8, 2026). Tax amnesty provision from Finance Bill 2026 official text via parliament.go.ke. This article is for informational and educational purposes only and does not constitute tax or legal advice. Consult a licensed tax practitioner for complex returns. Last updated: June 13, 2026.