KRA proposes new tax exemption rules for PWDs and caregivers

The Kenya Revenue Authority (KRA) has proposed new rules governing income tax exemptions for persons with disabilities and the parents or guardians who provide full care for dependants with severe disabilities.

The draft Income Tax (Persons with Disabilities, Parents or Guardians Tax Exemptions) Regulations, 2026, published for public consultation on November 9, set out how applicants would be assessed, the documentation they must provide and the income exemptions they may receive.

The proposal has particular importance for employees with disabilities and families supporting dependants who require substantial care.

The Sh150,000 exemption already exists

The headline figure in the draft is a monthly income exemption ceiling of Sh150,000, equivalent to Sh1.8 million annually.

However, this is not an entirely new tax benefit.

Eligible persons with disabilities already qualify for income tax exemption on up to Sh150,000 of monthly income under the Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010.

The new regulations propose to replace that framework with more detailed eligibility and assessment procedures.

Instead of treating the exemption as a single blanket amount, KRA proposes linking the relief to the assessed severity of an applicant's disability.

How the proposed assessment would work

The draft schedule uses disability assessments based on the International Classification of Functioning, Disability and Health (ICF) framework.

The proposed exemption would vary according to the type and severity of impairment.

For example, moderate levels of specified visual, speech, communication and intellectual impairments generally attract 30 per cent of the exemption ceiling, while severe levels attract 60 per cent.

Blindness, profound hearing impairment and specified complete or very severe conditions may qualify for the full 100 per cent.

For physical disabilities, the schedule also provides percentage-based assessments according to the extent of functional limitation.

The maximum remains Sh150,000 in exempt monthly income.

The percentages determine the portion of that ceiling an applicant may qualify for under the proposed schedule; they do not represent cash payments or tax refunds.

A separate route for parents and guardians

The draft introduces a specific application route for a parent or guardian providing full care and custody to a person certified as having a severe disability and unable to meet their basic needs.

Only one parent or guardian may ordinarily claim the exemption in respect of an eligible dependant.

Applicants would have to provide the dependant's National Council for Persons with Disabilities (NCPWD) registration details, proof of relationship, evidence of care and custody, and information demonstrating that they receive income.

The proposal also introduces a non-refundable KSh1,000 processing fee for guardian applications.

The exemption is separate from the existing PWD income exemption, and should not be presented as an automatic additional KSh150,000 allowance.

Documents and approval process

For persons with disabilities, the draft requires evidence of NCPWD registration, identification documents, a valid Tax Compliance Certificate, medical assessment reports from a government health facility and proof of income.

Employed applicants may also be required to provide an employer's letter explaining the nature of the disability and its effect on their work.

Applications would be reviewed through the NCPWD assessment and committee process before a recommendation is sent to the KRA Commissioner for a decision.

The proposed framework provides for a decision within 30 days after the committee's recommendation.

Exemption certificates would generally remain valid for five years, subject to renewal and reassessment where required.

When do the new rules take effect?

KRA is inviting public comments on the draft regulations until November 24, 2026.

They are not yet law, so applicants should continue following the existing exemption procedures until the proposed regulations are formally gazetted.

The draft also proposes revoking the 2010 order when the new framework comes into force.

It contains transitional provisions for existing exemption certificates, making the final regulations important for current beneficiaries as well as new applicants.

Comments can be submitted to KRA through its published stakeholder-engagement channel before the consultation deadline.