Post Retirement Medical Fund Kenya: KSh 15,000 Tax Deduction

Updated 27 October 2026

Since 27 December 2024, money you put into a registered post retirement medical fund (PRMF) can cut your PAYE directly. The Tax Laws (Amendment) Act, 2024 turned the old PRMF relief into a deduction from taxable employment income, capped at KSh 15,000 a month. This guide explains what a PRMF is, how the deduction works, what it is worth at different tax bands, and how to make sure your employer applies it.

Updated October 2026. Official sources: www.kra.go.ke.

Sources: KRA public notice 2157 (Amendments to PAYE Computation Pursuant to the Tax Laws (Amendment) Act, 2024), KRA public notice 2307 (Guidance on Employer Obligations in Applying Income Tax Deductions, Reliefs and Exemptions) and KRA’s PAYE FAQ on allowable deductions. Checked on 27 October 2026.

What is a post-retirement medical fund?

A PRMF is a fund that you (and sometimes your employer) pay into while working, so that you have money set aside to pay for medical cover or medical bills after you retire. Health costs tend to rise just as income falls, and many employer medical schemes end at retirement. A PRMF is designed to bridge that gap. Retirement schemes and insurers offer PRMFs, often alongside an existing pension scheme.

What changed in December 2024

According to KRA public notice 2157, from 27 December 2024 the following are deductible in working out taxable employment income:

• Contributions to a post-retirement medical fund, up to KSh 15,000 a month.
• The Affordable Housing Levy.
• Contributions to the Social Health Insurance Fund (SHIF).
• Mortgage interest up to KSh 30,000 a month (KSh 360,000 a year) on a qualifying home loan.
• Contributions to a registered pension or provident fund, or registered individual retirement fund, up to KSh 30,000 a month (KSh 360,000 a year).

The same notice says the old Post-Retirement Medical Fund Relief and the Affordable Housing Relief ceased to apply. In other words, a PRMF used to give you a relief (a reduction in tax), and now gives you a deduction (a reduction in the income that is taxed).

What the deduction is worth

A deduction saves you tax at your highest marginal PAYE rate. Kenya’s PAYE bands run from 10% up to 35%. So the tax saved on a contribution depends on the band your top shilling falls in:

These are simple worked examples: the saving is the contribution times the marginal rate, and only while your whole contribution sits within that band. Contributions above KSh 15,000 a month get no extra deduction. Check your own numbers with our PAYE and tax calculators.

How it fits with your pension deduction

The PRMF cap is separate from the pension contribution cap. Notice 2157 lists them as two different deductions: up to KSh 30,000 a month for registered pension, provident or individual retirement fund contributions, and up to KSh 15,000 a month for PRMF contributions. An employee who uses both fully can deduct up to KSh 45,000 a month between them, before the other deductions such as SHIF and the housing levy.

How to make sure your employer applies it

KRA notice 2307 explains that the Finance Act, 2025 amended the Income Tax Act to require employers to apply all relevant deductions, reliefs and exemptions when computing PAYE. For PRMF contributions, the notice says employers should allow them “provided these are declared by the employee and supported by the necessary documentation, and fall within the statutory limits”.

In practice:

1. Join a fund that qualifies as a post-retirement medical fund, through your employer’s scheme or individually.
2. Get documents from the fund showing your membership and monthly contributions.
3. Give them to payroll and ask HR to include the deduction in your PAYE computation.
4. Check your payslip the next month: taxable pay should fall by the contribution (up to the cap).
5. Keep records in case KRA asks, and reflect it correctly in your annual return.

Who benefits most

• Higher earners in the 30% and 35% bands, who save the most tax per shilling.
• Employees whose employer medical cover ends at retirement.
• People already maxing out the KSh 30,000 pension deduction, who want another tax-efficient way to save for later life.

Things to check before you join

• Fees and how the fund invests your money.
• When and how you can use the money: for premiums, bills, or both.
• What happens if you change jobs or leave Kenya.
• Whether the fund is registered and supervised; ask the provider for its registration details.

Post retirement medical fund: frequently asked questions

How much can I deduct for a post-retirement medical fund?

Up to KSh 15,000 a month, according to KRA public notice 2157.

Is there still a PRMF tax relief?

No. KRA says the Post-Retirement Medical Fund Relief ceased to apply from 27 December 2024 and was replaced by the deduction.

Is the PRMF deduction separate from the pension deduction?

Yes. Pension contributions have their own cap of KSh 30,000 a month.

What does my employer need from me?

A declaration and supporting documents showing your contributions, per KRA notice 2307.

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