How to calculate PAYE in Nigeria in 2026
A step-by-step guide to PAYE under the Nigeria Tax Act 2025: the new tax bands, pension and rent relief, and a worked example.
From 1 January 2026, PAYE (Pay As You Earn) in Nigeria is worked out under the Nigeria Tax Act 2025. It replaced the old Personal Income Tax Act (PITA) rules, so the consolidated relief allowance (CRA) is gone, the first ₦800,000 of taxable income is tax-free, and new bands apply above that.
Step 1: Start with gross annual pay
Add up everything the employee earns in the year: basic salary, housing, transport and any other allowances. If you know the monthly figure, multiply by 12.
Step 2: Take off the reliefs
These amounts are deducted before tax is calculated:
- Pension: the employee's contribution, at least 8% of basic + housing + transport.
- National Housing Fund (NHF): 2.5% of basic salary, where the employee contributes.
- Health insurance (NHIS) and life insurance premiums paid.
- Interest on a loan for the home you live in.
- Rent relief: 20% of the rent you pay in the year, up to ₦500,000.
What's left is your taxable income.
Step 3: Apply the 2026 tax bands
| Taxable income (per year) | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (to ₦3m) | 15% |
| Next ₦9,000,000 (to ₦12m) | 18% |
| Next ₦13,000,000 (to ₦25m) | 21% |
| Next ₦25,000,000 (to ₦50m) | 23% |
| Above ₦50,000,000 | 25% |
Each rate only applies to the slice of income inside its band, not to the whole amount.
Worked example
Adaeze earns ₦6,000,000 a year: basic ₦3,000,000, housing ₦1,500,000 and transport ₦600,000. She pays ₦1,200,000 rent a year and contributes 8% to her pension.
- Pension: 8% × ₦5,100,000 = ₦408,000
- Rent relief: 20% × ₦1,200,000 = ₦240,000
- Taxable income: ₦6,000,000 − ₦648,000 = ₦5,352,000
- Tax: ₦0 on the first ₦800,000, ₦330,000 (15% of ₦2,200,000) and ₦423,360 (18% of the remaining ₦2,352,000)
- PAYE: ₦753,360 a year, about ₦62,780 a month
Her take-home pay after PAYE and pension is ₦4,838,640 a year, about ₦403,220 a month.
What about 2025 and earlier?
Pay periods before 2026 use the PITA rules: a consolidated relief allowance of ₦200,000 or 1% of gross income (whichever is higher) plus 20% of gross income, bands from 7% to 24%, and a minimum tax of 1% of gross income. Our calculator lets you switch between the two.
These figures are estimates for planning. For payroll and filings, confirm with your state tax authority or a tax adviser.
