Finance Bill 2026: Excise Duty Changes | What Gets Taxed More From July

Excise duty is a tax on specific goods at the point of production or import. Unlike VAT, which applies broadly across almost everything you buy, excise targets particular product categories — tobacco, alcohol, and anything the government wants to make more expensive for policy reasons. The Finance Bill 2026 brings significant changes to this list.

Here is every excise duty change that matters to you.

Tobacco: both categories go up

Cigars, cheroots and cigarillos get a new excise rate of Ksh 18,000 per kilogram. The previous rate has been deleted from the schedule and replaced with this figure.

Other manufactured tobacco — including manufactured tobacco substitutes, homogeneous and reconstituted tobacco, and tobacco extracts and essences — moves to Ksh 12,550 per kilogram.

Neither of these rate changes was in the Finance Bill 2025. They are new in 2026 and take effect 1st July 2026.

The practical impact is straightforward: cigars get significantly more expensive. The per-kilogram rate on cigars is nearly 50% higher than the other manufactured tobacco category, which is consistent with the government treating cigars as a premium product that can absorb a heavier tax load.

Alcohol: two changes with different effects

Low-alcohol mixed drinks: The bill deletes the proviso attached to the excise rate on beer, cider, perry, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of alcoholic strength not exceeding 6%. Removing the proviso means the rate now applies cleanly without the conditional exemption that previously existed. In practical terms, some mixed drinks that benefited from the proviso's condition may now face the standard excise rate without exception.

High-strength neutral alcohol: The bill deletes the words "purchased by licensed manufacturers of spirituous beverages" from the description of spirits of undenatured extra neutral alcohol with alcoholic strength exceeding 90%. The new rate for this product is Ksh 80 per litre.

Previously, the lower concession rate on high-strength neutral alcohol only applied to licensed distilleries buying the product to manufacture spirits. By removing the restriction to licensed manufacturers, all buyers of this product face the same rate. Distilleries that relied on a concessionary rate to reduce their input costs will see that advantage disappear.

Fruit juices: new per-litre rates replace the old structure

The Finance Bill 2026 deletes the existing excise description covering fruit juices (including grape must) and vegetable juice and replaces it with two new categories:

• Fruit juices and vegetable juice, unfermented and not containing added spirit: Ksh 14.14 per litre
• Fruit juices and vegetable juice, unfermented, containing added sugar or other sweetening matter: Ksh 20 per litre

The separation into sugar-free and sweetened categories creates a tiered structure that charges more on juices with added sugar. This is consistent with the government's policy direction on sugar-sweetened beverages, which has been built up incrementally over several Finance Bills.

For consumers, packaged fruit juices and vegetable drinks — both local and imported — will cost more from July. The jump is larger for sweetened juice products.

Sugar confectionery: now applies to local manufacturers too

The Finance Bill 2026 deletes the word "imported" from the sugar confectionery description under tariff heading 17.04. Previously, the excise charge specifically covered imported sugar confectionery. Removing that word means locally manufactured sweets, candy, and sugar-based confectionery products are now also subject to excise duty — not just those brought in from outside.

This is a level-playing-field change for importers who argued local manufacturers had an unfair advantage. For consumers, it raises the possibility that locally made sweets and confectionery products could become slightly more expensive.

New excise on coal and classic vehicles

Two entirely new product categories are added to the excise schedule:

Coal: A new excise rate of 5% of excisable value applies to coal. This is a brand new addition — coal had no specific excise duty treatment before. Given that coal is used industrially and has environmental implications, this aligns with a general direction of taxing carbon-intensive inputs. The direct consumer impact is indirect: industries that use coal may pass costs on in their pricing.

Antique, vintage and classic vehicles: Any motor vehicle whose year of first registration is at least 30 years before the date of purchase, and whose value is at least Ksh 10 million (exclusive of depreciation), now attracts excise duty at 50% of excisable value.

This is a targeted luxury tax. A 30-year-old vehicle worth Ksh 10 million or more is not a daily commuter — it is a collector's item. The 50% excise rate is among the highest in the schedule and will make importing such vehicles significantly more expensive.

Phone excise: paid at activation, not at import

The Finance Bill 2026 also changes how excise duty on phones is collected. The description shifts from "imported cellular phones" to "Telephones for cellular networks and other wireless networks" (tariff heading 8517) at 25% of excisable value — and the duty becomes payable at the time of activation, not at the border.

Two things change here. First, the scope expands from imported-only to all phones, including locally assembled handsets. Second, the point of collection shifts from customs to activation. This means excise duty on phones is now collected when you switch on a new device, regardless of where it was made or imported from.

This complements the VAT and import fee exemptions on phones discussed in Part 3: What's Getting Cheaper — VAT and Import Fee Changes. The removal of VAT and the import declaration fee lowers the cost of bringing phones into the country, while excise duty remains — now activated at the point of use.

Summary table

Continue reading the Finance Bill 2026 series:

• Part 1: The Big Picture - What Is the Finance Bill 2026?
• Part 2: Income Tax - What Changes in Your Pay and Pocket
• Part 3: What's Getting Cheaper - VAT and Import Fee Changes
• Part 4: Crypto and Digital Money - KRA Is Watching
• Part 6: Foreigners and Diaspora - The New Rental Tax
• Part 7: Filing and Compliance - New KRA Deadlines