Nigeria PAYE 2026: How to Calculate Your Take-Home Pay

From 1 January 2026, the Nigeria Tax Act 2025 changed how PAYE (Pay As You Earn) is calculated for every salaried worker in Nigeria. The old Consolidated Relief Allowance is gone, replaced by a higher tax-free threshold and a new rent relief. Here's how to work out your tax — and your real take-home pay — under the new rules. Prefer to skip the maths? Use the free Nigeria PAYE Calculator.

The 2026 PAYE tax bands

Tax is applied progressively to your chargeable income (income after allowable deductions):

• First ₦800,000 — 0%
• Next ₦2,200,000 — 15%
• Next ₦9,000,000 — 18%
• Next ₦13,000,000 — 21%
• Next ₦25,000,000 — 23%
• Above ₦50,000,000 — 25%

Step 1: Work out your deductions

Before applying the bands, subtract allowable deductions from your gross income:

• Pension — a minimum of 8% of your emoluments.
• NHF / NHIS — where applicable.
• Rent relief — 20% of annual rent, capped at ₦500,000 (declaration and documentation required).

Step 2: A worked example

Say you earn ₦6,000,000 a year and pay ₦1,200,000 in rent:

• Pension (8%): ₦480,000
• Rent relief (20% of ₦1.2m, capped at ₦500k): ₦240,000
• Chargeable income: ₦6,000,000 − ₦480,000 − ₦240,000 = ₦5,280,000

Now apply the bands to ₦5,280,000:

• First ₦800,000 @ 0% = ₦0
• Next ₦2,200,000 @ 15% = ₦330,000
• Remaining ₦2,280,000 @ 18% = ₦410,400
• Annual PAYE = ₦740,400 → about ₦61,700 per month

Your monthly take-home is roughly ₦398,300 (gross, minus pension and tax), at an effective tax rate of about 12.3%.

Step 3: Check your payslip

Employers must deduct PAYE monthly and remit to the relevant State Internal Revenue Service. If your payslip tax looks far off the estimate above, ask your HR/payroll team whether they've applied the 2026 bands, your pension, and your declared rent relief correctly.

Rent relief: how to claim it

Rent relief is new in 2026 and the most commonly missed deduction. You can deduct 20% of the annual rent you actually pay on your home, capped at ₦500,000 — so rent of ₦2,500,000 or more reaches the cap. It is conditional on evidence: a tenancy agreement and proof of payment, and the landlord's details. Employees claim it by giving the employer the documents so payroll applies it monthly; the self-employed claim it on the annual return. If you own your home, there is no equivalent relief.

The other deductions, in order of size

• Pension. The 8% employee contribution under the Pension Reform Act is deducted from gross before tax. It is usually the largest relief and it is automatic for anyone on a contributory scheme.
• National Housing Fund. 2.5% of basic salary, where the employer operates it. Deductible.
• National Health Insurance. Contributions to the NHIA scheme are deductible.
• Life insurance premiums. Premiums on a policy on your own life or your spouse's, paid in the year, are deductible.
• Gone: the Consolidated Relief Allowance. Any calculator or payroll still applying 20% of gross plus ₦200,000 is producing a 2025 figure.

Bonuses, 13th month and a second income

PAYE is an annual tax collected monthly, so a bonus is not taxed at a special rate; it is added to the year's income and taxed in the bands it falls into. A ₦1,000,000 bonus for someone earning ₦6,000,000 is taxed at the marginal rate for income between ₦6 and ₦7 million, not at your average rate — which is why December's payslip looks heavier than expected. A second job or freelance income is added to the same annual total; the second employer does not know about the first, so the shortfall is settled on the annual return, and it is better to budget for it than to discover it.

If you are the employer

You deduct PAYE each month and remit it to the State Internal Revenue Service where the employee lives, by the 10th of the following month, with a schedule naming each employee and their TIN. The annual employer return listing every employee's pay and tax is due by 31 January. Employees cannot get a Tax Clearance Certificate unless their employer has remitted and filed, which is why the question comes back to you in March. The calculator handles the arithmetic; the compliance calendar has the dates.

The single biggest 2026 change for workers: the first ₦800,000 is tax-free and the old 1% minimum tax is gone — most low and middle earners keep more of their salary.

Want your exact numbers in seconds? Try the Nigeria PAYE Calculator, and if you run a business, see what the reforms mean for your company in our Nigeria Tax Act 2025 guide.