Nairobi raises health levy, increases payroll contributions for city workers

The Nairobi County Assembly passed the 2026/27 County Fiscal Strategy Paper by a 72-18 margin on July 6. The document adjusts the health services levy collected from salaried employees in the county from 1.5 percent to 2 percent of gross pay. The change applies to workers in both public and private establishments registered with the county revenue authority.

Why the adjustment arrives now

County revenue records show collections from the existing levy fell short of the KSh 4.8 billion target set in the 2025/26 estimates by KSh 620 million. Assembly documents attribute the gap to slower formal employment growth in the preceding year. The new rate is expected to close that shortfall and fund planned expansions at Mama Lucy Kibaki Hospital and Mbagathi District Hospital.

Payroll clerks at firms with more than 50 employees will begin remitting the higher rate from the September salary cycle. For a worker earning KSh 60,000 monthly, the deduction rises from KSh 900 to KSh 1,200. The extra KSh 300 stays within the county health fund rather than the national exchequer.

Immediate effects on households

Residents who rely on county facilities for routine care will see the levy reflected first in take-home pay rather than at the point of service. County treasury circulars indicate the additional revenue will support procurement of dialysis consumables and malaria test kits already budgeted for the second quarter. Workers in the informal sector remain outside the deduction system, though they continue to pay user fees at the same facilities.

County records list 184,000 formal employees currently contributing to the levy. The treasury projects the rate change will generate KSh 780 million in the remaining nine months of the financial year. That figure appears in the same fiscal strategy paper approved by the assembly.

Implementation begins with employer registration updates in August. The county revenue authority will issue revised deduction schedules by July 25. No further assembly vote is required before the September start date.