President Ruto Signs Finance Bill 2025 Into Law: What It Means for Kenyans

Date: June 26, 2025

By: Ben Tutor Blog Team

President William Ruto has officially signed the Finance Bill 2025 into law, alongside the Appropriations Bill and the Supplementary Appropriations Bill, marking a significant step in reshaping Kenya's fiscal and development agenda. The signing ceremony was held at State House, Nairobi.

Key Highlights of the Finance Act, 2025

The new Finance Act brings sweeping reforms designed to boost economic growth, improve tax compliance, and support both local industries and everyday Kenyans.

1. Tax Relief for Employees

In a major win for workers, the law now mandates that employers automatically apply all tax exemptions and deductions available to employees. This aims to reduce the tax burden and improve take-home pay without employees having to apply for these benefits manually.

2. Increased Tax-Free Subsistence Allowance

The daily tax-free subsistence allowance has been significantly raised—from KSh 2,000 to KSh 10,000. This is expected to benefit employees who frequently travel or work away from their primary place of duty.

3. Digital Assets Tax Repealed

In a move to support digital innovation, the Digital Assets Tax has been repealed. It has been replaced with a 5% excise duty on transaction fees charged by virtual asset providers. This new approach aims to strike a balance between taxation and encouraging digital financial growth.

4. Capital Gains Tax Cut for Major Investors

To attract global and regional investment, Capital Gains Tax has been reduced from 15% to 5% for large-scale investments certified by the Nairobi International Financial Centre (NIFC).

5. Support for Farmers and Manufacturers

The Act introduces tax exemptions on critical inputs and raw materials—such as mosquito repellents, tea, and coffee packaging materials. This is expected to lower production costs and enhance competitiveness in the agricultural and manufacturing sectors.

6. Excise Duties Adjusted

New excise duties will apply to betting, gaming, and digital services. However, the Act provides simplified tax procedures for small-scale distillers, potentially helping small businesses in the sector to thrive.

Appropriations Act: Budget Breakdown for 2025/26

The Appropriations Act, 2025, authorizes the use of KSh 1.88 trillion from the Consolidated Fund to finance government operations and development projects.

Additional Revenue

Government departments and agencies will raise an additional KSh 671.99 billion through Appropriations-in-Aid (AIA)—funds collected internally to supplement the budget.

Sectoral Highlights:

🧑‍🌾 Agriculture – KSh 47.6 Billion

• Fertilizer subsidy programs

• Coffee sector reforms

• Agricultural value chain development

• KSh 18 billion allocated to agro-industrial and textile park projects

🏥 Health – KSh 133.4 Billion

• Funding for Universal Health Coverage (UHC)

• Sh17.3 billion to combat HIV, malaria, and tuberculosis

📚 Education – KSh 658.4 Billion

• Teacher recruitment

• Free basic education

• University scholarships and a revamped higher education funding model

🛣️ Infrastructure – KSh 217.3 Billion

• Road and bridge construction

• KSh 62.8 billion for energy, rural electrification, and clean energy initiatives

Supplementary Appropriation Bill Also Signed

Alongside the main bills, President Ruto also enacted the Supplementary Appropriation Bill, enabling urgent or revised spending needs that arise during the financial year.

What This Means for You

The signing of these bills represents more than just legal formalities—they are the tools that will shape Kenya’s economic direction, service delivery, and development priorities over the next year.

Whether you're a salaried employee, a digital entrepreneur, a farmer, a teacher, or a healthcare worker, the changes in the Finance Act and budget allocations will directly or indirectly impact your daily life and opportunities.

Stay informed. Stay empowered.