Nigeria PAYE Tax Calculator 2026

What Changed on 1 January 2026

The Nigeria Tax Act 2025 replaced the long-standing graduated personal income tax structure with a simpler, more generous set of bands that took effect on 1 January 2026. The headline change is a large N800,000 tax-exempt band — the first N800,000 of taxable income is taxed at 0%. Above that, rates climb from 15% to a 25% top rate on very high incomes. The old consolidated relief allowance is gone, replaced by a cleaner set of statutory deductions plus a new rent relief.

The 2026 PAYE Bands

This calculator applies the following progressive schedule to your taxable income (gross minus pension, NHF and rent relief): 0% on the first N800,000; 15% on the next N2,200,000 (up to N3m); 18% on the next N9,000,000 (up to N12m); 21% on the next N13,000,000 (up to N25m); 23% on the next N25,000,000 (up to N50m); and 25% above N50,000,000. Tax is charged band by band, so only the slice of income that falls inside a band is taxed at that band's rate.

Deductions That Lower Your Tax

Before any tax is calculated, three deductions can shrink your taxable income. Pension is 8% of your basic salary. NHF (National Housing Fund) is 2.5% of basic, where you contribute. And rent relief is the lower of 20% of your annual rent and N500,000. Because pension and NHF are charged on basic — modelled here as 60% of gross — they also reduce the actual cash you take home, while rent relief is purely a tax deduction.

A Worked Example in Naira

Take Chidi, an employee in Lagos earning a gross salary of N6,000,000 a year, who pays N1,200,000 in annual rent and contributes to both pension and NHF.

First, the deductions. His assumed basic is 60% of gross = N3,600,000. Pension = 8% of N3,600,000 = N288,000. NHF = 2.5% of N3,600,000 = N90,000. Rent relief = the lower of 20% of N1,200,000 (N240,000) and N500,000 = N240,000.

Total deductions = 288,000 + 90,000 + 240,000 = N618,000. Taxable income = 6,000,000 − 618,000 = N5,382,000.

Now the bands. The first N800,000 is taxed at 0%. The next N2,200,000 at 15% = N330,000. That covers income up to N3,000,000. The remaining N2,382,000 falls in the 18% band = N428,760. Total annual PAYE = 330,000 + 428,760 = N758,760, or about N63,230 per month.

His net pay = 6,000,000 − 288,000 (pension) − 90,000 (NHF) − 758,760 (PAYE) = N4,863,240 a year, roughly N405,270 a month. His effective tax rate is about 12.6% of gross.

How to Lower Your PAYE Legally

The biggest lever for most employees is rent relief — keep genuine tenancy receipts so you can claim up to N500,000. Maximising pension contributions also reduces taxable income while building retirement savings. If you are weighing a raise or comparing offers, model take-home pay first; a higher gross can push part of your income into a steeper band. For broader income-tax context across regions, compare with our tax bracket calculator, and if you are converting an hourly rate into an annual figure, the hourly to salary calculator pairs neatly with this one.

Read the Result, Then Verify

These figures are an indicative estimate for the 2026 tax year under the Nigeria Tax Act 2025. The tool assumes basic salary is 60% of gross and does not model every allowance, exemption or employer-specific arrangement. Use it to plan your budget and understand your effective rate, then confirm the exact figure with a tax professional or the official Nigeria Revenue Service before filing.