Your January payslip lands, and the tax line looks different. Your colleague in Abuja says she now pays less, your friend in Kano says his tax went up, and the WhatsApp group is full of confident voice notes that contradict each other. Since 1 January 2026, Nigeria has new personal income tax rules. Use the calculator below to see what they mean for your own salary, then read on for how it works.
Under the Nigeria Tax Act 2025, the first ₦800,000 of your yearly taxable income is taxed at 0%, and the rest is taxed in bands from 15% to 25%. Your taxable income is your gross pay minus allowed deductions, such as your 8% pension contribution, NHF, and rent relief of 20% of the rent you pay (up to ₦500,000).
Nigeria PAYE & take-home pay calculator (2026)
Uses the Nigeria Tax Act 2025 rates that apply from 1 January 2026. Enter your pay and press Calculate.
Estimate only, for employees taxed through PAYE. It is not tax advice. Your employer’s payroll, your state tax authority and your exact pay structure decide your final tax.
Key takeaways
- The first ₦800,000 of yearly taxable income is tax-free, and anyone earning the national minimum wage or less pays no personal income tax.
- The old Consolidated Relief Allowance (CRA) is gone. Rent relief, worth 20% of your yearly rent up to ₦500,000, replaces part of it.
- Pension, NHF, NHIS, life insurance premiums and mortgage interest on your own home still reduce your taxable income.
- Freelancers and remote workers are not on PAYE, but they still owe income tax under the same bands.
How PAYE works in Nigeria from 2026
PAYE (Pay As You Earn) is the income tax your employer deducts from your salary every month and pays to the tax authority on your behalf. The Nigeria Tax Act 2025, which took effect on 1 January 2026, replaced the old Personal Income Tax Act rates with the bands below. They apply to your taxable income for the year, not your gross pay.
| Yearly taxable income | Tax rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (₦800,001 to ₦3,000,000) | 15% |
| Next ₦9,000,000 (₦3,000,001 to ₦12,000,000) | 18% |
| Next ₦13,000,000 (₦12,000,001 to ₦25,000,000) | 21% |
| Next ₦25,000,000 (₦25,000,001 to ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
These are marginal rates. Moving into a higher band only affects the naira in that band, not your whole salary.
What reduces your taxable income
- Pension: your 8% contribution to a Retirement Savings Account. Under the Pension Reform Act 2014 it is calculated on at least your basic salary, housing and transport allowances.
- National Housing Fund (NHF): 2.5% of basic salary, if you contribute.
- Health insurance (NHIS) contributions.
- Life insurance premiums paid for yourself or your spouse.
- Mortgage interest on a loan for the home you live in.
- Rent relief: 20% of the rent you actually pay each year, up to ₦500,000. Keep your tenancy agreement and receipts, and ask your HR or payroll team how to declare your rent.
The Consolidated Relief Allowance, which many payslips used to show, no longer exists from 2026.
How much tax will I pay on my salary?
These examples assume an 8% pension contribution calculated on gross pay, no NHF and no rent relief. Your result may differ, so use the calculator for your own numbers.
| Monthly gross pay | Monthly PAYE | Monthly take-home | Effective rate |
|---|---|---|---|
| ₦100,000 | ₦3,800 | ₦88,200 | 3.8% |
| ₦150,000 | ₦10,700 | ₦127,300 | 7.1% |
| ₦250,000 | ₦24,500 | ₦205,500 | 9.8% |
| ₦300,000 | ₦32,180 | ₦243,820 | 10.7% |
| ₦500,000 | ₦65,300 | ₦394,700 | 13.1% |
| ₦750,000 | ₦106,700 | ₦583,300 | 14.2% |
| ₦1,000,000 | ₦148,100 | ₦771,900 | 14.8% |
| ₦2,000,000 | ₦338,900 | ₦1,501,100 | 16.9% |
Worked example: ₦500,000 a month with rent relief
Picture Zainab, an accountant in Abuja. She earns ₦500,000 a month and pays ₦1,500,000 a year in rent.
- Gross pay for the year: ₦500,000 × 12 = ₦6,000,000.
- Pension (8%): ₦480,000.
- Rent relief: 20% of ₦1,500,000 = ₦300,000 (below the ₦500,000 cap).
- Taxable income: ₦6,000,000 − ₦480,000 − ₦300,000 = ₦5,220,000.
- Tax: 0% on the first ₦800,000, 15% on the next ₦2,200,000 (₦330,000), and 18% on the remaining ₦2,220,000 (₦399,600). Total: ₦729,600 a year, or ₦60,800 a month.
Without rent relief, Zainab would pay ₦65,300 a month. Declaring her rent saves her ₦4,500 a month, or ₦54,000 a year.
Freelancers, remote workers and side income
If you are self-employed, freelance, or paid directly by a foreign company, no employer is running PAYE for you. You still owe income tax under the same bands, and you are expected to file your own return with the tax authority of the state where you live. Read our guides on protecting your pay in a foreign remote role and staying safe on freelance platforms.
How to check your payslip
- Compare the monthly PAYE on your payslip with the calculator result.
- Check that your pension is 8% of at least your basic, housing and transport allowances, and that it is reaching your Retirement Savings Account.
- If you pay rent, ask HR whether your rent relief has been applied.
- If the numbers are far apart, ask your payroll team politely how they calculated your tax. Mistakes happen, especially in the first months of a new law.
When to get professional help
Speak to a chartered accountant or your state internal revenue service if you have several income sources, income from abroad, rental income, a business, or you think you have been over-taxed. Tax rules can also change through new regulations, so check official guidance before you file.
Try this this week
Put your last payslip next to the calculator. Enter your gross pay and rent, compare the monthly PAYE, and if they differ by more than a few thousand naira, send your HR or payroll team one polite question about how your tax was calculated.
Frequently asked questions
Is the first ₦800,000 tax-free in Nigeria?
Yes. From 1 January 2026, the first ₦800,000 of your yearly taxable income is taxed at 0%. Taxable income is your gross pay minus allowed deductions such as pension and rent relief, so many people with a gross salary above ₦800,000 a year still pay little or no tax.
Do minimum wage earners pay tax?
No. People who earn the national minimum wage or less are exempt from personal income tax under the new rules. The national minimum wage is ₦70,000 a month, or ₦840,000 a year.
Is the Consolidated Relief Allowance still used?
No. The Consolidated Relief Allowance was removed from 2026. It has been replaced by rent relief of 20% of the rent you pay, capped at ₦500,000, while pension, NHF, NHIS, life insurance and mortgage interest deductions remain.
Who collects my PAYE?
Employers deduct PAYE and usually pay it to the internal revenue service of the state where you live. The Nigeria Revenue Service (NRS), which replaced the Federal Inland Revenue Service in January 2026, handles federal taxes and some groups of taxpayers.
Related reading
- How to save for rent in Nigeria without borrowing
- How to negotiate your salary with confidence
- How to create a budget that actually works
Sources
- PwC Worldwide Tax Summaries. Nigeria: Taxes on personal income, Deductions and Sample personal income tax calculation (reviewed May 2026).
- BusinessDay. Who is required to pay personal income tax in Nigeria under the 2026 reforms?
- TheCable. A guide to contributors’ rights under the Contributory Pension Scheme (Pension Reform Act 2014).
- AllAfrica / NAN. Replacement of FIRS with NRS will overhaul revenue administration.
Written and fact-checked by the Mindset.ng Editorial Team in line with our Editorial Policy. This calculator and article are for educational purposes only and are not personalised tax or financial advice. Requirements change. Always confirm current details with your state internal revenue service, the Nigeria Revenue Service or a qualified professional. Read our Disclaimer. Last updated: 7 October 2026.