TSC explains June PAYE adjustments following payroll system error

The Teachers Service Commission (TSC) has explained the changes in Pay As You Earn (PAYE) deductions reflected in the June 2026 payroll, attributing the adjustments to the correction of a payroll system anomaly identified during routine reviews.

Taking to their X account on Thursday, the commission received concerns from teachers and secretariat staff regarding the changes in their PAYE deductions and sought to clarify the circumstances that led to the adjustments.

According to TSC, the issue arose following the implementation of amendments introduced under Section 7 of the Tax Laws (Amendment) Act, 2024, which changed Section 15(2) of the Income Tax Act by exempting employee contributions to the Affordable Housing Levy (AHL) Fund and the Social Health Insurance Fund (SHIF) from income tax.

The commission explained that the Integrated Personnel and Payroll Database (IPPD) system was subsequently reconfigured to implement the new tax exemptions in line with the law and to ensure employees benefited from the changes.

"Following the enactment of Section 7 of the Tax Laws (Amendment) Act, 2024, which amended Section 15(2) of the Income Tax Act to exempt employee contributions to the Affordable Housing Levy (AHL) Fund and the Social Health Insurance Fund (SHIF) from income tax, the System Administrator of the Integrated Personnel and Payroll Database (IPPD) reconfigured the payroll system to implement the tax exemptions in compliance with the law and for the benefit of TSC employees," the Commission stated.

TSC's explanation comes a week after teachers across Kenya raised concerns after receiving their June 2026 salaries with unexpectedly higher Pay As You Earn (PAYE) deductions, despite no new salary increment.

From around June 19–20, many teachers reported an increase of about Sh108 in PAYE, with some deductions rising from Sh10,334 to Sh10,442 and others from Sh18,279 to Sh18,387, prompting calls for an explanation from the Teachers Service Commission (TSC).

Progressively, TSC further added that an unintended error occurred during the reconfiguration process, affecting the calculation of tax relief on National Social Security Fund (NSSF) contributions.

"During the system reconfiguration process, an unintended anomaly occurred whereby, in addition to AHL and SHIF contributions, National Social Security Fund (NSSF) contributions which had already been configured as tax-exempt in the payroll system were inadvertently re-captured for tax relief purposes. This resulted in the application of a duplicate tax relief on NSSF contribution for all TSC employees."

The teachers commission outlined that the anomaly was detected through its routine payroll system reviews, prompting immediate corrective action in the June 2026 payroll for both teachers and secretariat staff.

"Through its routine payroll system reviews, the Commission identified the anomaly and immediately took corrective action in the June 2026 payroll for both Teachers and Secretariat. Consequently, the PAYE deductions were adjusted to align with the correct tax computation as provided for under the law," it added.

The commission maintained that the revised PAYE deductions were not the result of a new tax but were intended to restore the correct tax computation following the payroll correction.

It explained that the adjustment was necessary to ensure accurate PAYE calculations going forward and expressed regret for any inconvenience caused to employees.

"The Commission wishes to clarify that the PAYE adjustment reflected in the June 2026 payroll arose from the correction of the payroll system configuration and was necessary to ensure accurate computation of Pay As You Earn deductions going forward. The Commission regrets any inconvenience or concern that this adjustment may have caused to TSC employees and appreciates their understanding," it concluded.