Mbadi Unveils Major Tax Cuts: How It Will Boost Your Finances!
BY THE DISPATCH DIGITAL REPORTER
Treasury Cabinet Secretary John Mbadi has outlined the government’s plan to reduce taxes over the next three years to alleviate the financial pressure on Kenyans. During the launch of the 2025/26 Budget Preparation Process, Mbadi announced a reduction in Value Added Tax (VAT) from 16% to 14% and a decrease in corporate tax from 30% to 25%.
This tax reduction is part of a larger strategy aimed at boosting economic resilience, particularly in key industries such as agriculture, manufacturing, and housing. While no additional spending will be introduced in the medium term, the government plans to improve resource allocation by enhancing efficiency, accountability, and transparency, especially in financial management and procurement.
Mbadi stressed the importance of maintaining fiscal discipline, committing to measures that will stimulate growth and expand opportunities in vital areas for economic recovery. He noted that agriculture would continue to play a pivotal role in driving manufacturing and economic expansion, with specific focus on supporting small and medium enterprises (SMEs) and affordable housing projects.
These critical sectors will be prioritised in the Fourth Medium Term Plan, which also outlines initiatives aimed at transforming the micro, small, and medium enterprise (MSME) economy, healthcare, housing, settlement, and the development of Kenya’s digital infrastructure.
Reflecting on the current fiscal year, Mbadi acknowledged that the FY 2024/25 budget is being implemented despite setbacks, such as the withdrawal of the 2024 Finance Bill. In light of this, the government has adjusted its priorities to align with the available resources, having forfeited some revenue measures.
The planned tax cuts over the medium term are expected to increase household purchasing power and improve business profitability, providing much-needed relief for both citizens and the private sector.
