Nigeria PAYE Calculator

How PAYE is calculated in Nigeria

PAYE is progressive: the rate rises as income rises, but each rate applies only to the slice of income that falls inside its band. Someone earning ₦4,000,000 does not pay 18% on all of it — they pay 0% on the first slice, 15% on the next, and 18% only on what is left over.

The tax is not charged on your gross salary. It is charged on chargeable income, which is gross pay minus the deductions the law allows. The order of operations is always the same:

1. Start with annual gross income — salary, allowances and any cash benefits.
2. Deduct your pension contribution, which is a minimum of 8% of gross under the Pension Reform Act.
3. Deduct rent relief: 20% of the annual rent you actually pay, capped at ₦500,000.
4. Deduct NHF and NHIS contributions where they apply to you.
5. What remains is chargeable income. Apply the bands below to that figure.

The calculator above runs exactly this sequence. Enter your gross and your rent, and it shows each deduction separately so you can see where the money goes rather than just the final number.

Nigeria PAYE tax bands for 2026

These are the bands for the 2026 year of assessment under the Nigeria Tax Act 2025. They apply to chargeable income, not gross pay.

The 0% first band means anyone whose chargeable income lands at ₦800,000 or below pays no PAYE at all. Because pension and rent relief come off before the bands are applied, a worker can earn meaningfully more than ₦800,000 gross and still fall under the threshold.

A worked example: ₦6,000,000 a year

Take someone on ₦6,000,000 gross a year — ₦500,000 a month — paying ₦1,200,000 a year in rent and contributing the standard 8% to pension.

• Pension at 8% of ₦6,000,000 is ₦480,000.
• Rent relief is 20% of ₦1,200,000, which is ₦240,000. That is under the ₦500,000 cap, so the full amount counts.
• Chargeable income is ₦6,000,000 − ₦480,000 − ₦240,000 = ₦5,280,000.

Now apply the bands to ₦5,280,000. The first ₦800,000 is taxed at 0%, giving nothing. The next ₦2,200,000 is taxed at 15%, giving ₦330,000. That leaves ₦2,280,000, which falls in the 18% band and produces ₦410,400.

Notice the gap between the 18% band rate and the 12.3% effective rate. That difference is what people miss when they assume their band rate is what they pay on everything. The effective rate is always lower, because the earlier slices are taxed at 0% and 15%.

What the same maths looks like at other salaries

Assuming the standard 8% pension and rent at roughly a fifth of gross, the picture across common salary levels looks like this.

The progression is deliberately gentle at the bottom. At ₦1,200,000 a year the effective rate is under 4%; it does not reach even half the top band rate until income is well into eight figures.

What changed from the old law

If you have used a PAYE calculator built before 2026, it is almost certainly wrong now. Three things changed materially.

The Consolidated Relief Allowance is gone

The old CRA gave the higher of ₦200,000 or 1% of gross, plus 20% of gross, as a blanket relief. It has been abolished. In its place the new law raises the tax-free band to ₦800,000 and introduces a targeted rent relief.

Rent relief replaced a blanket allowance

Relief is now tied to rent you actually pay: 20% of it, capped at ₦500,000 a year. This is not automatic. You have to declare the rent and be able to evidence it with a tenancy agreement or receipts if asked.

Minimum tax has been abolished

The old 1% minimum tax on gross income no longer applies. If your chargeable income falls below the ₦800,000 threshold, your liability is genuinely zero rather than a token 1%.

Filing, deadlines and who is responsible

For salaried employees, PAYE is deducted at source. Your employer withholds it monthly and remits it to the relevant State Internal Revenue Service, which for most people is the state where they live rather than where the company is registered.

• Employers remit deductions by the 10th day of the month following the deduction.
• Employers file an annual return of all emoluments by 31 January for the preceding year.
• Individuals with other income file a self-assessment return by 31 March.
• Self-employed people and business owners pay direct assessment rather than PAYE, using the same bands.

If you run a business rather than draw a salary, the company-side obligations are separate and covered by the Nigeria Business Tax Calculator, which handles Companies Income Tax, the 4% Development Levy and VAT.