How to Run Payroll in Nigeria (2026)
Payroll Nigeria 2026 looks different from last year. The Nigeria Tax Act 2025 replaced PITA on 1 January 2026 — new bands, no CRA, a fresh tax-free threshold. If your accountant is still computing PAYE the old way, your employees are either overpaying or underpaying tax right now.
This guide walks you through every step: computing gross pay, applying the new PAYE bands, handling pension and NHF, hitting remittance deadlines, and keeping FIRS off your back.
Quick Answer
To run payroll in Nigeria in 2026, you compute each employee’s chargeable income (gross emoluments minus pension, NHF where applicable, and rent relief), then apply the NTA 2025 PAYE bands — starting at 0% on the first ₦800,000 annually and going up to 25% above ₦50,000,000. The Nigeria Tax Act 2025 (NTA 2025) replaced the Personal Income Tax Act (PITA) effective 1 January 2026. Remit PAYE to the NRS by the 10th of the following month, and pension within 7 working days of salary payment.
You can opt for Lint’s payroll which handles all the headache of computing and remitting taxes, pension and staff salaries.
What You’ll Need
Documents & information:
- Employee offer letters (basic, housing, transport allowances broken out)
- Pension Fund Administrator (PFA) details for each employee
- NHF opt-in status per employee
- Annual rent figure (for rent relief calculation)
- Tax Identification Numbers (TINs) for all staff
Estimated cost per employee per payroll run (Lint Payroll):
Lint Payroll covers PAYE computation, pension, NHF, payslips, remittance, and salary advances for ₦500 per employee per payroll run. Salary disbursement is free to a Lint account and ₦40 to any other Nigerian bank.
Timeline: Once set up, payroll runs same day. First-time setup: 1–3 days for gathering employee details.
Step-by-Step: Running Payroll in Nigeria (2026)
Step 1: Break Down Each Employee’s Gross Emoluments
Compute annual gross emoluments (Basic + Housing + Transport + Other Allowances). [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)]
Most Nigerian employment contracts split salary into components. You need all of them — not just “basic.” A common structure looks like this:
| Component | Monthly | Annual |
|---|---|---|
| Basic | ₦150,000 | ₦1,800,000 |
| Housing | ₦75,000 | ₦900,000 |
| Transport | ₦50,000 | ₦600,000 |
| Other allowances | ₦25,000 | ₦300,000 |
| Gross | ₦300,000 | ₦3,600,000 |
Pro tip: If employee’s contract just says “salary” with no breakdown, get it restructured. The split matters for pension computation and PAYE.
Step 2: Deduct Statutory Contributions
Before applying PAYE, subtract the statutory deductions that reduce chargeable income.
Pension (Pension Reform Act 2014):
Pensionable emoluments = Basic + Housing + Transport (NOT gross salary). The employee contributes 8% and the employer contributes 10%.
Using the example above:
- Pensionable emoluments: ₦150,000 + ₦75,000 + ₦50,000 = ₦275,000/month = ₦3,300,000/year
- Employee pension (8%): ₦264,000/year
NHF (National Housing Fund Act):
Under BFA 2022, private-sector employees can opt out of NHF. Treat it as opt-in per employee, not a default deduction.
If the employee has opted in, NHF is 2.5% of gross monthly salary.
Health Insurance (NHIA 2022):
There is no longer a single statutory ‘5% employee + 10% employer of basic’ formula. Premiums vary by chosen plan. Use your actual HMO invoice — not a fixed percentage.
Common mistake: Many payroll templates still use the old NHIS 5%+10% formula. That is outdated. Use your actual HMO plan cost.
Step 3: Apply the Rent Relief (If Applicable)
The rent relief introduced under NTA 2025 is 20% of annual rent paid by the employee, capped at ₦500,000 per year. It replaces the Consolidated Relief Allowance (CRA), which was eliminated under NTA 2025. The employee files for the relief; the employer applies it to the PAYE computation.
If an employee pays ₦800,000 rent per year: 20% = ₦160,000 relief (below the ₦500,000 cap).
If an employee pays ₦3,000,000 rent per year: relief is capped at ₦500,000.
Important: The Consolidated Relief Allowance (CRA) — formerly N200,000 + 20% of gross income — does NOT apply from 2026 onward. Posts and payroll templates written for the 2026+ tax regime must NOT include CRA in PAYE calculations. If your accountant is still deducting CRA, flag it now.
Step 4: Calculate Chargeable Income
Chargeable Income = Gross Emoluments − Employee Pension − NHF (if opted in) − Rent Relief
Continuing the example (employee pays ₦600,000 rent/year, opted into NHF):
| Annual | |
|---|---|
| Gross emoluments | ₦3,600,000 |
| Less: Employee pension (8% of ₦3,300,000) | −₦264,000 |
| Less: NHF (2.5% of ₦3,600,000) | −₦90,000 |
| Less: Rent relief (20% of ₦600,000) | −₦120,000 |
| Chargeable income | ₦3,126,000 |
Step 5: Apply the NTA 2025 PAYE Bands
The NTA 2025 PAYE bands under the Sixth Schedule, effective from 1 January 2026, are:
- First ₦800,000 — 0%
- Next ₦2,200,000 (up to ₦3,000,000) — 15%
- Next ₦9,000,000 (up to ₦12,000,000) — 18%
- Next ₦13,000,000 (up to ₦25,000,000) — 21%
- Next ₦25,000,000 (up to ₦50,000,000) — 23%
- Above ₦50,000,000 — 25%
Applying the bands to ₦3,126,000 chargeable income:
| Band | Chargeable | Rate | Tax |
|---|---|---|---|
| First ₦800,000 | ₦800,000 | 0% | ₦0 |
| Next ₦2,200,000 | ₦2,200,000 | 15% | ₦330,000 |
| Remainder | ₦126,000 | 18% | ₦22,680 |
| Annual PAYE | ₦352,680 | ||
| Monthly PAYE | ₦29,390 |
Divide annual PAYE by 12 for the monthly deduction.
Quotable take: The first ₦800,000 of chargeable income is taxed at zero. On a ₦300,000/month salary, that wipes out two months of tax entirely.
Step 6: Compute Net Pay
Net Pay = Gross Salary − Employee Pension − NHF (if opted in) − PAYE
| Monthly | |
|---|---|
| Gross salary | ₦300,000 |
| Employee pension | −₦22,000 |
| NHF | −₦7,500 |
| PAYE | −₦29,390 |
| Net pay | ₦241,110 |
Step 7: Remit All Deductions on Time
Miss these deadlines and you’re paying penalties — not your employees.
Remittance deadlines are:
- PAYE: 10th day of the month following the month of deduction
- Pension: Within 7 working days of salary payment
- NHF: Monthly, alongside PAYE remittance
- Annual employer return (Form H1): 31 January for the prior tax year
- Annual personal tax return: 31 March for the prior tax year
Late pension remittance attracts a penalty of 2% of unpaid contributions per month.
PAYE goes to the NRS (formerly FIRS). The Federal Inland Revenue Service has transitioned to The Nigeria Revenue Service. Update any old remittance references from “FIRS” to “NRS.”
Pro tip: Set up automated remittances. Missing the 10th-of-month PAYE deadline is one of the most common (and avoidable) compliance failures for Nigerian SMBs.
Full Cost Breakdown: Running Payroll for 5 Employees
| Item | DIY Cost | Lint Payroll |
|---|---|---|
| PAYE computation | Your time (or your accountant’s hourly fee) | Included |
| Pension filing | Your time | Included |
| NHF (if opted in) | Your time | Included |
| Payslip generation | Your time | Included |
| Bank transfer per employee | ₦40/employee (external bank) | ₦40 per employee for external bank transfers (free if employee has a Lint account) |
| Lint Payroll fee | — | ₦500/employee/run |
| Total for 5 employees | Hours of admin + accountant fees | ₦2,500/month |
Common Payroll Mistakes Nigerian Business Owners Make in 2026
1. Still using PITA bands.
If you are reaching for a 7%/11%/15%/19%/21%/24% band structure, STOP — that is the old PITA regime and is no longer in effect. Many accountants, Excel templates, and HR software tools haven’t updated. Check your payroll source.
2. Including CRA in the PAYE calculation.
The CRA (formerly N200,000 + 20% of gross income) does NOT apply from 2026 onward. The replacement is the rent relief — but that requires the employee to actually file for it and prove they pay rent.
3. Computing pension on gross salary.
Pension is computed on Basic + Housing + Transport only — NOT gross salary. Including “other allowances” in the pension base inflates the deduction.
4. Defaulting NHF for all employees.
Under BFA 2022, private-sector employees can opt out of NHF. Treat it as opt-in per employee, not a default deduction. Deducting NHF from employees who’ve opted out is an overpayment you’ll have to correct.
5. Using the old NHIS percentage formula.
The old NHIS Act 2004 framing of ‘5% employee + 10% employer of basic salary’ is no longer the universal rule. Do not state it as a current statutory rate.Use your HMO invoice.
6. Forgetting that gratuity is now taxable.
Gratuity is now taxable under NTA 2025 — it was tax-exempt under PITA. If you pay gratuity, factor it into chargeable income.
FAQs: Payroll Nigeria 2026
How do I calculate PAYE in Nigeria in 2026?
Compute annual chargeable income (gross emoluments minus employee pension, NHF if opted in, and rent relief), then apply the NTA 2025 bands: 0% on the first ₦800,000, 15% on the next ₦2,200,000, 18% on the next ₦9,000,000, 21% on the next ₦13,000,000, 23% on the next ₦25,000,000, and 25% above ₦50,000,000. Divide the annual PAYE by 12 for monthly deductions.
How much tax is deducted from a ₦300,000 salary in Nigeria?
Using the example above (with pension and NHF deductions reducing chargeable income to about ₦3,126,000 annually), PAYE comes to approximately ₦29,390/month. The exact figure depends on the employee’s allowance structure, rent paid, and NHF status.
What changed from PITA to NTA 2025?
Key changes include: a tax-free threshold of ₦800,000 (first band at 0%), the lowest taxed rate moving from 7% to 15%, the highest rate moving from 24% to 25%, elimination of the Consolidated Relief Allowance, introduction of rent relief (20% of annual rent, capped at ₦500,000), and gratuity becoming taxable.
What is the new withholding tax rate in Nigeria in 2026?
Common WHT rates under NTA 2025 include: professional services and consulting — 10%, directors’ fees — 10%, rent payments — 10%, interest/dividends/royalties — 10%, construction with materials — 5%, construction excluding materials — 2.5%, transportation services — 5%. For service categories not listed above, confirm the current rate with the NRS rather than assuming 10%.
When must PAYE be remitted in Nigeria?
PAYE must be remitted to the NRS by the 10th day of the month following deduction. Miss this and you risk penalties.
What is the minimum wage in Nigeria in 2026?
The national minimum wage is ₦70,000 per month, set by the National Minimum Wage (Amendment) Act 2024 and unchanged as of 2026. Some states pay above it — Lagos, for example, pays ₦85,000.
Can Lint handle pension remittance too?
Yes. Lint Payroll at ₦500 per employee per payroll run covers PAYE computation, pension, NHF, payslips, remittance, and salary advances [SOURCE: Lint pricing (source of truth)] — all in one flat fee.
Related Tools
- Lint Payroll → — PAYE + pension + NHF + payslip for ₦500/employee
- Free PAYE Calculator → — Work out take-home pay, PAYE, pension, and rent relief in seconds
- NRS (Nigeria Revenue Service) → — Official PAYE remittance portal
- PenCom → — Pension compliance and employer registration
- FMBN → — NHF registration and remittance
The Bottom Line
Payroll in Nigeria in 2026 is genuinely more employee-friendly than it was under PITA — that 0% band on the first ₦800,000 of chargeable income makes a real difference for your lower-paid staff. But the change also means every payroll template, every Excel sheet, and every accountant memo from 2025 needs to be reviewed.
Get the bands right. Drop the CRA. Check your pension base. And if the monthly admin of computing, filing, and remitting everything is eating your Sundays — Lint handles it for ₦500 per employee.
Published: May 2026
Regulatory sources: Nigeria Tax Act 2025 (Sixth Schedule); Pension Reform Act 2014; National Housing Fund Act; National Health Insurance Authority Act 2022.
Official portals: Nigeria Revenue Service | PenCom | FMBN
This post is for informational purposes. For complex payroll situations, consult a certified tax professional.
Related on Lint
- Free PAYE Calculator (2026) — see take-home pay, tax and pension in seconds.
- Lint Payroll — run salary, PAYE, pension and salary advances in one funded run.
