Agricultural expansion - farm works allowance increased to 50%. From 1 January, 2007 construction costs of agricultural buildings that qualify as farm works will be eligible for 50% tax relief per annum over 2 years.

Encourage the construction of hostels. This is through the Industrial Building Allowance extended to educational buildings and hostels. The Industrial Building Allowances (IBA) was extended to the construction costs of hostels or certified education buildings with effect from 1 January 2007.  The rate is 10% per annum, which is a significant rise from the usual 2.5% IBA rate.  This 10% deduction actually exclusively favours private developers of student hostels, as many schools and colleges are already tax exempt.

The tax deduction on hostel construction costs increased to 10% (formerly at 4% per annum) effective from 1 January 2007.

A 100% tax deduction for the costs of road, hospital, public school or similar infrastructure costs of approved projects was introduced Any interest income earned by a depositor on a Home Ownership Savings Plans (HOSP) of up to a maximum of Ksh 3 million is exempt from tax starting 1 January 2007.
The expenses of Construction costs of approved social infrastructure, e.g. public schools, hospitals or roads, are tax-deductible expenses.