How to calculate the tax on your salary in Nigeria (2026)

Since 1 January 2026 the tax on a Nigerian salary is worked out under the Nigeria Tax Act 2025, and most of the explanations online still describe the old system — the Consolidated Relief Allowance, 7% on the first slice. If your payslip does not match what a 2024 article told you to expect, that is why.

This is the current calculation, in the order payroll does it, with worked examples at salaries people actually earn. Every figure here was produced by the same arithmetic as the PAYE calculator on this site, so you can check any of them against your own numbers.

Step 1 — Start from gross, and check the minimum wage line

Gross is your total annual pay: basic, housing, transport and any other taxable allowances, before anything is deducted. Payroll works in annual figures and divides by twelve at the end.

First check: if you earn ₦70,000 a month or less — the national minimum wage — you are outside personal income tax altogether under the 2025 Act. Not taxed at 0%; not taxed. Pension can still be deducted if your job is pensionable, but PAYE should be nil, and if a pre-2026 payroll template is still deducting it, say so.

Step 2 — Take off pension

The statutory employee pension contribution is 8%, but it is charged on basic, housing and transport allowances only, not on total pay. Most Nigerian packages are structured so those three make up around 80% of gross, which is the assumption used in every example below. If your employer structures pay differently, use your own split.

On ₦4,800,000 a year (₦400,000 a month) with the usual 80% structure, pensionable pay is ₦3,840,000 and the pension deduction is ₦307,200. That comes off before tax is calculated.

Step 3 — Take off rent relief, if you pay rent

The Consolidated Relief Allowance is gone. In its place is rent relief: the lower of 20% of the annual rent you actually paid, or ₦500,000. It is not automatic — you need to have paid rent and be able to show it — and if you own your home or live rent-free, there is nothing to claim here.

Someone paying ₦1,200,000 a year in rent gets ₦240,000 of relief. The ₦500,000 cap only matters once annual rent passes ₦2,500,000.

National Housing Fund and National Health Insurance contributions and life assurance premiums also come off here, where you have the documentation.

Step 4 — Apply the six bands to what is left

What remains is chargeable income, and the bands apply to that — not to your gross salary.

The bands are cumulative, which is the part people most often get wrong. Crossing into the 18% band does not put your whole income at 18% — only the slice that falls inside it. Someone with ₦3,500,000 of chargeable income pays nothing on the first ₦800,000, 15% on the next ₦2,200,000, and 18% on the remaining ₦500,000.

Worked example: ₦400,000 a month

No rent claimed, standard 80% structure.

That is an effective rate of 12.5% on gross. Take-home after pension and tax is about ₦324,500 a month. Claim rent relief on ₦1,200,000 of rent and the monthly tax falls by ₦3,600, to ₦46,292.

Worked example: ₦1,000,000 a month

An effective rate of 15.1%. Notice that even at ₦1m a month none of the income reaches the 21% band — that starts at ₦12,000,000 of chargeable income, which on this structure means a gross salary of a little over ₦1.1m a month.

Read your own salary off this table

The same calculation across the salaries people most often ask about. Standard 80% pension structure, no rent relief claimed; the right-hand column shows the monthly tax if you claim relief on ₦1,200,000 of annual rent.

Take-home here means gross less pension and PAYE. NHF, NHIS, union dues or a cooperative deduction would come off as well, and would reduce the tax slightly where they are deductible.

Why your tax may have changed in January

Two things moved at once: the bands widened at the bottom, and the automatic CRA relief was removed. Below roughly ₦1.3m a month the first effect wins and you pay a little less than in 2025. Above it the second effect wins and you pay more — and the gap grows with salary, because the relief you lost was a percentage of gross.

If you are negotiating a new salary, negotiate gross. An employer who agreed a net figure in 2025 is now paying meaningfully more gross to deliver it, and the conversation goes better when both sides are looking at the same number.

Common questions

How much tax is deducted from a ₦200,000 salary in Nigeria? About ₦18,080 a month on the standard structure with no rent relief — an effective rate of 9%. Take-home after pension and tax is around ₦169,100.

Is PAYE calculated on gross or net? On chargeable income: gross less pension, rent relief and other allowable deductions. The bands never apply to gross directly.

Is the 13th-month salary taxed? Yes. A bonus or thirteenth month is taxable income in the year it is paid, and because it lands in one month it can push that month's deduction up sharply even though the annual bill is simply the annual bill.

Who remits the tax? Your employer deducts PAYE monthly and remits it to the tax authority of the state where you live, by the tenth of the following month. The liability for getting it wrong sits with the employer, but it is your return.

This article explains the law as enacted and is not tax advice for your circumstances. Speak to a qualified adviser or the relevant state revenue service before you rely on it.