Finance Bill 2026 Passes as MPs Approve Key Tax Changes

The National Assembly officially passed the Finance Bill 2026 on the night of June 18, 2026. The legislation cleared its Third Reading after an intense debate in Parliament.

It now awaits President William Ruto’s assent before becoming law. Once signed, most provisions will take effect on July 1, 2026.

MPs Approve Bill Through Division Vote

Lawmakers initially approved the Bill through acclamation. However, opposition MPs demanded a formal division vote. Consequently, Speaker Moses Wetang’ula ordered an electronic vote under Standing Order No. 70.

The final results showed 122 MPs supporting the Bill. Meanwhile, 40 legislators voted against it.

Notably, no Member of Parliament abstained. The outcome reflected the numerical strength of the Kenya Kwanza administration and its coalition partners.

Parliament Drops Several Controversial Tax Proposals

To ease public concerns, lawmakers removed several proposed taxes.

• First, Parliament rejected plans to increase rental income tax.

• Secondly, MPs scrapped the proposed 16 percent VAT on imported second-hand clothes, commonly known as mitumba.

• In addition, lawmakers dropped the proposed annual freehold land tax. These amendments followed concerns from businesses, landlords, and consumers over the rising cost of living.

Key Tax Enforcement Measures Remain

Despite removing some taxes, Parliament retained several revenue enforcement measures. The Kenya Revenue Authority (KRA) will now use electronic data to generate prepopulated tax returns.

Additionally, the law strengthens monitoring of digital transactions and online business activities. Authorities believe the measures will improve tax compliance and increase revenue collection.

Tax Amnesty Retained

The Bill also preserves a tax amnesty programme. Taxpayers with outstanding penalties and interest accumulated up to December 31, 2025, can benefit.

However, they must clear the principal tax amount before the end of 2026.

Next Step: Presidential Assent

Parliamentary clerks will now prepare the final document for transmission to State House. President Ruto will then decide whether to sign the Bill into law.

If approved, the Finance Bill 2026 will guide Kenya’s tax framework for the 2026/27 financial year.