President William Ruto has signed into law the Division of Revenue Bill 2025 at State House, Nairobi.

The legislation sets out how revenue collected at the national level will be distributed between the national and county governments to ensure an equitable allocation of resources and support effective service delivery across both levels of government.

The Bill was passed by both the National Assembly and Senate after being reviewed by a mediation committee, which introduced amendments to the original proposals on the sharing of nationally raised revenue.

Under the new law, the national government will receive Sh2.3 trillion, while counties have been allocated Sh415 billion. An additional Sh9.6 billion has been set aside under the equalisation fund.

The Bill introduced by Alego Usonga, Member of Parliament, Samuel Atandi, had initially proposed that Sh2.84 trillion be shared between the national and county governments. 

It suggested that Sh2.42 trillion be allocated to the national government and Sh405.1 billion to county governments, representing a Sh17.6 billion increase from the previous financial year.

However, following amendments, the projected ordinary revenue for the 2025/2026 financial year was revised downward from Sh2.84 trillion to Sh2.76 trillion. The Finance Committee cited lower-than-expected revenue collection as the reason for the adjustment.

The Senate also made further amendments, including revising the reference year for audited and approved revenues from the 2020/2021 financial year, which had reported Sh1.57 trillion, to the 2021/2022 financial year, which recorded Sh1.92 trillion in revenue. 

The county allocation was also revised upwards from Sh405.1 billion to Sh465 billion.

The signing of the Division of Revenue Bill now clears the way for the introduction of the County Allocation of Revenue Bill, which will determine how the funds are distributed among Kenya’s 47 counties.