Under the Income Tax Act (Cap 470), interest earned on MMFs and bank deposits in Kenya is subject to a 15% withholding tax (WHT) for resident individuals. It is a final tax — you don't need to declare the interest again on your annual return.
Who withholds it?
The payer does — the bank or fund manager deducts 15% at source and remits it to KRA. You see the net amount credited to your account.
What this means for advertised rates
- MMFs usually quote the gross yield (e.g. 11%) in headline marketing because it looks bigger.
- The number that actually lands in your account is the net yield (e.g. 9.35% after 15% WHT).
- Bank fixed-deposit and savings rates are also subject to WHT — your effective return is ~85% of the headline rate.
Exemptions
- Post Office Savings Bank interest is exempt up to a threshold.
- Some retirement-scheme interest is taxed differently.
- Non-residents face a higher 25% WHT rate.
Across realtimerates we always show the net yield for MMFs so comparisons against bank deposits are fair.