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About ninety percent of the country’s energy needs are satisfied through charcoal and firewood. This study was conducted to assess the contribution of improved charcoal kilns to the household income in Kilindi District, Tanzania. Simple random sampling was applied to select two wards from 21 wards, and one village from each ward. A total of 200 charcoal producers were randomly selected. The data collection tools were questionnaires and focus group discussion. The profit analysis was conducted using gross margins technique. The student t-test statistics was conducted to determine if there was statistically significant difference between the two values (improved and traditional kilns). The findings show that charcoal production activities contributed 82% of the total household income. The gross margin from using improved kilns was 52% while using traditional kilns was 26%. The t-test show that the difference in gross margin was statistically significant at p-value of 0.02 inferring that charcoal producers who used improved kilns in the study area generated more income than those who used traditional kilns. The study recommends that local governments should sensitise communities on advantages of using of improved charcoal kilns since it has shown a positive impact on the household income and reduces forest degradation.