Kenya Instalment Tax Calculator

Background.

Instalment tax is how KRA collects tax in advance from businesses and individuals whose tax liability isn't fully settled through PAYE withholding — rather than waiting for one lump-sum payment after the year ends, taxpayers pay their estimated annual liability in four equal quarterly instalments as the year progresses. KRA's own guidance is direct about who this applies to: every person subject to tax except those under the separate Turnover Tax regime, and specifically individuals and companies whose tax liability exceeds KES 40,000 and is not fully covered by PAYE.

The practical question every instalment-tax payer faces is which number to base their quarterly payments on, because the year isn't over yet and the exact final liability isn't known. KRA allows two approaches: 110% of the prior year's tax liability, or the taxpayer's own estimate of the current year's liability. The 110% prior-year basis is attractive precisely because it doesn't require any forecasting — last year's tax bill is already a known, filed number — and using it is commonly treated as a safe harbour, since a taxpayer who pays faithfully on that basis has a defensible position even if the business grows faster than 10% that year. The current-year-estimate basis can produce a more accurate (and sometimes lower) instalment figure for a business that genuinely expects lower income, but it carries more risk if the estimate turns out too low.

Whichever basis is chosen, the resulting annual figure is split into four equal instalments of 25% each, due on the 20th day of the 4th, 6th, 9th, and 12th months of the taxpayer's year of income — for the common December year-end, that's 20 April, 20 June, 20 September, and 20 December. Missing the mark matters: KRA charges a 20% penalty on the shortfall between the instalment tax actually paid and the taxpayer's real final liability once it's determined, which is why choosing a basis that reasonably tracks the business's likely performance is more than an academic exercise.

This calculator handles both bases side by side. Enter last year's tax liability and (if you plan to use it) your own current-year estimate, choose which basis applies to you, and the calculator returns the quarterly instalment amount, the annual total, and — once you know your actual final liability, whether from a later return or a revised forecast — the underpayment shortfall and the resulting 20% penalty exposure. It also flags whether your prior-year liability clears KRA's KES 40,000 threshold, as a starting point for understanding whether instalment tax applies to you in the first place.

What is kenya instalment tax calculator?

Instalment tax is a Kenyan tax-payment mechanism requiring most taxpayers — companies and individuals whose income isn't already covered by PAYE withholding — to pay their estimated annual tax bill in four quarterly instalments during the year, rather than as a single payment afterward. It exists because KRA already collects tax progressively from employees through PAYE; instalment tax extends that same 'pay as you go' principle to business profits, rental income, and other non-employment income that PAYE doesn't touch.

The amount each instalment is based on can be computed two ways: 110% of the taxpayer's prior year tax liability, or the taxpayer's own estimate of the current year's liability. Both are legitimate; the choice affects cash flow and underpayment-penalty risk differently. Each instalment is 25% of the chosen annual basis, due on the 20th day of the 4th, 6th, 9th, and 12th months of the taxpayer's year of income.

This calculator is valid for a standard taxpayer following the ordinary 4-instalment schedule. It does not model the separate schedule KRA applies to agricultural-sector taxpayers (75% due in the 9th month, 25% in the 12th) — that exception is explained in the FAQs but not built as a selectable calculation mode. It also does not calculate exact calendar due dates accounting for weekends or public holidays, or determine whether a specific taxpayer is exempt (for example, under the Turnover Tax regime).

How to use this calculator.

1. 01Enter your prior year's final tax liability in KES, from your filed return.
2. 02If you plan to use the current-year-estimate basis, enter your own estimate of this year's tax liability.
3. 03Select which basis applies to your instalment payments — 110% of prior year, or your current-year estimate.
4. 04Read the primary result: the amount due on each of the four quarterly instalment dates.
5. 05Once you know your actual final tax liability (from a filed return or a confident revised forecast), enter it to see any underpayment shortfall and the resulting 20% penalty exposure.
6. 06Check whether your prior-year liability clears the KES 40,000 threshold KRA applies to determine who owes instalment tax in the first place.

The formula.

The calculator first determines the instalment tax basis according to the basis you selected: under the prior-year basis, it multiplies last year's tax liability by 1.10 (110%); under the current-year-estimate basis, it uses your entered estimate directly. Whichever basis applies, each quarterly instalment is exactly 25% of that annual basis figure, and the four instalments together equal the full basis amount — due on the 20th of the 4th, 6th, 9th, and 12th months of the year of income.

The underpayment check compares your actual final tax liability, once known, against the instalment basis you paid on. If your actual liability is higher than the basis (for example, because a current-year estimate came in too low, or because the business grew by more than 10% and the 110% prior-year basis under-covered it), the shortfall is the difference, and KRA's stated penalty is 20% of that shortfall. If your actual liability is at or below the basis you paid on, there is no shortfall and no penalty — this is exactly the protection the 110% prior-year basis is designed to offer, since it only fails to protect you if growth exceeds 10% year over year.

The threshold flag is a simple proxy: it checks whether your prior-year tax liability exceeds KRA's stated KES 40,000 threshold. The real test KRA applies is on the current year's actual liability, which by definition isn't known until the year is over — using the prior year's figure as a stand-in is a reasonable approximation for most taxpayers whose income doesn't swing wildly year to year, but it is a judgement call, not a substitute for KRA's own determination.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Kenya Revenue Authority — Instalment Tax (basis, schedule, threshold, and underpayment penalty)
2. [2]Kenya Revenue Authority — Types of Taxes overview (confirms the KES 40,000 threshold applies to both individual and corporate taxpayers)
3. [3]Income Tax Act, Cap 470 (Laws of Kenya) — statutory basis for instalment tax