Last updated: 7 July 2026. Facts checked against current Nigerian regulation at time of update.

Understanding Your Payslip in Nigeria: A Plain-English Guide

At a Glance

• Your gross salary is split into components (basic, housing, transport). Deductions come off that.
• The three main deductions are PAYE tax, pension (8% of basic + housing + transport as set by the Pension Reform Act 2014), and NHF (2.5% of basic under the National Housing Fund Act).
• On a ₦250,000 gross salary, expect to take home roughly ₦193,250.
• If the numbers on your payslip do not match this guide, your employer may owe you money back.

Introduction

You checked your bank alert. ₦250,000 became something closer to ₦193,000. No explanation, just a smaller number.

That gap is not random. Every Naira that left your gross salary went somewhere specific, and you have the right to know exactly where. This guide walks you through understanding your payslip in Nigeria, line by line, using real numbers. By the end, you will be able to verify your own payslip in about 15 minutes.

In this guide, you will learn:

• What each component of your gross salary actually means
• How PAYE tax, pension, and NHF are calculated under current Nigerian law
• How to spot errors that could mean you are being overcharged
• What to do if something looks wrong

No jargon. Just the math.

Table of Contents

1. How your gross salary is structured

2. The three main deductions explained

3. Fully worked example: ₦250,000 gross salary

4. Fully worked example: ₦500,000 gross salary

5. The rent relief most employees never claim

6. Five payslip mistakes that cost you money

7. How to verify your payslip step by step

8. What to do if your payslip is wrong

9. FAQs

Step 1: Understand How Your Gross Salary Is Structured

Before deductions happen, your employer splits your salary into components. A typical Nigerian payslip looks like this:

Component	What it is	₦250,000 Example
Basic Salary	Your core wage	₦150,000
Housing Allowance	Fixed housing support	₦50,000
Transport Allowance	Fixed commute support	₦25,000
Other Allowances	Meal, medical, performance, etc.	₦25,000
Total Gross		₦250,000

Why does this split matter? Because deductions are not all calculated on your full ₦250,000. Pension and NHF each use a different base, which we will show in the math below.

Step 2: Understand the Three Main Deductions

PAYE Tax (Pay As You Earn)

PAYE is income tax. Your employer deducts it every month and sends it to your state’s Internal Revenue Service on your behalf. The Nigeria Tax Act 2025 replaced the Personal Income Tax Act effective 1 January 2026. The rates that apply from 2026 onward are below.

The tax bands under NTA 2025 are:

• First ₦800,000 of annual chargeable income: 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%

The first ₦800,000 of your annual chargeable income is completely tax-free. That is new under NTA 2025 and a significant relief for lower-income earners.

Quick take: If someone quotes you the old 7%/11%/15%/19%/21%/24% bands, those are from the old Personal Income Tax Act and are no longer in effect.

Pension Contribution

Under the Pension Reform Act 2014, the employee contributes 8% and the employer contributes 10%, for a total of 18%. Pensionable emoluments are basic salary + housing allowance + transport allowance. NOT gross salary.

So your pension base is not your full gross. It is basic + housing + transport only. In our ₦250,000 example, that is ₦225,000, not ₦250,000. This matters because some employers calculate pension on the wrong number, and that costs you money.

National Housing Fund (NHF)

Under the National Housing Fund Act, the NHF rate is 2.5% of basic salary. Your NHF contributions are not lost money. They make you eligible to apply for housing loans through the Federal Mortgage Bank of Nigeria at below-market interest rates.

One important note: under the Business Facilitation Act 2022, private-sector employees can opt out of NHF. If you have opted in, the deduction should appear on your payslip. If you have not opted in but it is still being deducted, ask your HR team.

Health Insurance (NHIA)

Health insurance premiums are now paid to HMOs on plan-based pricing. There is no longer a single statutory rate formula. Premiums vary by chosen plan.

Your employer picks a plan and pays a premium. What appears on your payslip as a health deduction depends entirely on your employer’s chosen HMO and plan tier. If your payslip shows “NHIS 5% + 10% of basic,” that is the old formula from the NHIS Act 2004 and is no longer the universal rule.

For this guide’s worked examples, we use ₦7,500 as a sample health deduction. Your actual number may differ.

Step 3: Fully Worked Example — ₦250,000 Gross Salary

Let us show every calculation, step by step.

Salary structure:

Component	Amount
Basic Salary	₦150,000
Housing Allowance	₦50,000
Transport Allowance	₦25,000
Other Allowances	₦25,000
Total Gross	₦250,000

Pension base: Basic + Housing + Transport = ₦150,000 + ₦50,000 + ₦25,000 = ₦225,000

PAYE calculation:

Annual salary = ₦250,000 × 12 = ₦3,000,000

Apply the NTA 2025 bands:

• First ₦800,000 at 0% = ₦0
• Next ₦2,200,000 at 15% = ₦330,000
• Annual PAYE = ₦330,000
• Monthly PAYE = ₦330,000 ÷ 12 = ₦27,500

All deductions:

Deduction	Calculation	Monthly Amount
PAYE	Per NTA 2025 bands	₦27,500
Pension (8% per Pension Reform Act 2014)	₦225,000 × 8%	₦18,000
NHF (2.5% per NHF Act)	₦150,000 × 2.5%	₦3,750
Health (sample)	Plan-based	₦7,500
Total Deductions		₦56,750

Net Pay = ₦250,000 − ₦56,750 = ₦193,250

[IMAGE: A clean payslip layout showing the breakdown above, with gross at top, each deduction labelled with its percentage and Naira amount, and net pay highlighted at the bottom]

Step 4: Fully Worked Example — ₦500,000 Gross Salary

Let us check a higher salary to show how the tax bands work together.

Salary structure:

Component	Amount
Basic Salary	₦300,000
Housing Allowance	₦100,000
Transport Allowance	₦50,000
Other Allowances	₦50,000
Total Gross	₦500,000

Pension base: ₦300,000 + ₦100,000 + ₦50,000 = ₦450,000

PAYE calculation:

Annual salary = ₦500,000 × 12 = ₦6,000,000

Apply the NTA 2025 bands:

• First ₦800,000 at 0% = ₦0
• Next ₦2,200,000 at 15% = ₦330,000
• Next ₦3,000,000 at 18% = ₦540,000
• Annual PAYE = ₦870,000
• Monthly PAYE = ₦870,000 ÷ 12 = ₦72,500

All deductions:

Deduction	Calculation	Monthly Amount
PAYE	Per NTA 2025 bands	₦72,500
Pension (8% per Pension Reform Act 2014)	₦450,000 × 8%	₦36,000
NHF (2.5% per NHF Act)	₦300,000 × 2.5%	₦7,500
Health (sample)	Plan-based	₦7,500
Total Deductions		₦123,500

Net Pay = ₦500,000 − ₦123,500 = ₦376,500

The Rent Relief Most Employees Never Claim

This is one of the most overlooked items in the NTA 2025.

Under the Nigeria Tax Act 2025, employees can claim rent relief at 20% of annual rent paid, capped at ₦500,000 per year. This replaces the Consolidated Relief Allowance (CRA), which was eliminated under NTA 2025. The employee files for relief and the employer applies it to the PAYE computation.

Example: You pay ₦600,000 rent per year.

• Rent relief = 20% × ₦600,000 = ₦120,000
• This ₦120,000 is deducted from your chargeable income before tax is applied.
• On the ₦250,000 salary example above, this would save you ₦120,000 × 15% = ₦18,000 per year in PAYE. That is ₦1,500 back in your pocket every month.

To claim it, you need your tenancy agreement, rent receipts, and proof of payment. Give these to your employer’s HR or payroll team and ask them to apply the relief.

Five Payslip Mistakes That Cost You Money

1. Using Old PITA Tax Rates

Some payroll teams have not updated their software. If your employer is using the 7%/11%/15%/19%/21%/24% bands, you may be overpaying tax.

2. Pension Calculated on Full Gross

Pensionable emoluments are basic salary + housing allowance + transport allowance, not gross salary. If your employer calculates pension on your full ₦250,000 instead of ₦225,000, you are paying ₦2,000 extra per month. That is ₦24,000 per year overpaid.

3. No NHF Remittance

Your employer deducts NHF from your pay but does not send it to the Federal Mortgage Bank of Nigeria. You lose your housing loan eligibility without ever knowing. The NHF remittance deadline is monthly, alongside the PAYE remittance.

4. Unclaimed Rent Relief

You are paying rent but nobody told you that you can file for a tax deduction on it. See the section above. This is free money you are leaving on the table.

5. CRA Still Appearing on Your Payslip

The Consolidated Relief Allowance was eliminated under NTA 2025 and does not apply from 2026 onward. If you still see “CRA” on your payslip in 2026, your employer’s payroll has not been updated. This can lead to wrong tax figures.

How to Verify Your Payslip Step by Step

Step 1: Confirm Your Salary Components

Check that your payslip lists basic, housing, and transport separately. You need these to verify pension.

Step 2: Recalculate PAYE

1. Multiply your monthly gross by 12 to get your annual salary.

2. Subtract any rent relief you have claimed.

3. Apply the NTA 2025 bands from the table above.

4. Divide the annual tax by 12.

5. Compare to what appears on your payslip.

Step 3: Verify Pension

Add basic + housing + transport. Multiply by 8% (Pension Reform Act 2014). Compare to your payslip.

Step 4: Check NHF

If you have opted in, NHF should be 2.5% of your basic salary only, as set by the National Housing Fund Act.

Step 5: Get Your RSA PIN

Your pension goes to a Retirement Savings Account in your name. Contact your employer’s chosen Pension Fund Administrator (PFA) to get your RSA PIN, then check your balance online quarterly. Employers must pay pension within 7 working days of salary payment. If contributions are missing from your statement, something is wrong.

What to Do If Your Payslip Is Wrong

For PAYE errors: Raise it with HR first. If that fails, file a complaint with your State Internal Revenue Service. Provide your own calculation using the NTA 2025 bands. If their number and your number do not match, ask them to show you which rate table they are using. You are entitled to a corrected calculation and a refund for any overpaid tax, which your employer can process against future deductions or via your state IRS.

For pension errors: Contact PenCom (National Pension Commission) if your employer deducted pension but did not pay it across. Check your RSA statement quarterly.

For NHF errors: Contact the Federal Mortgage Bank of Nigeria (FMBN) to verify your contributions are being paid across.

Failing to pay across deductions already taken from your pay is a serious offence. You have every right to escalate.

Understanding Payslip Nigeria: FAQs

Q: Why is my net pay lower than I expected?

A: Your gross salary is the number before any deductions. PAYE tax, pension (8% of basic + housing + transport under the Pension Reform Act 2014), NHF (if opted in), and health insurance all come off before your bank sees the money.

Q: Can I opt out of pension?

A: No. Pension is mandatory under the Pension Reform Act 2014. The money goes to your personal Retirement Savings Account. It is yours when you retire or leave employment.

Q: What happens to my NHF contributions?

A: After a qualifying period of contributions, you can apply to the Federal Mortgage Bank of Nigeria for a housing loan at below-market interest rates.

Q: Can I claim rent relief?

A: Yes. Under NTA 2025, you can claim 20% of your annual rent, capped at ₦500,000 per year. You need a tenancy agreement and proof of payment. Your employer applies the relief to your PAYE computation.

Q: What if my employer deducts PAYE but does not pay it across?

A: Report to your State Internal Revenue Service. The PAYE remittance deadline is the 10th day of the month following the month of deduction. Missing this deadline exposes your employer to penalties.

Your Deductions Are Not Losses

On the ₦250,000 example, your ₦56,750 in monthly deductions breaks down like this:

Deduction	What it actually is
₦27,500 PAYE	Your legal tax contribution, routed to your state
₦18,000 pension	Your retirement fund, in your name
₦3,750 NHF	Your future housing loan eligibility
₦7,500 health	Medical coverage for you and (often) your family

None of it is ideal. But none of it is disappearing either. The pension and NHF contributions especially come back to you. Understanding where it goes is the first step to making sure you get everything you are owed.

The best payslip is a correct payslip. Now you have the tools to check.

Take Control of Your Payslip

If you run a business and your payroll team is still working out these calculations manually, that is where errors creep in. Lint Payroll handles salary disbursement, PAYE computation under the Nigeria Tax Act 2025, pension to every PFA via PenCom, salary advances, payslips, and an employee self-service portal. Pricing is ₦500 per employee per payroll run, covering PAYE computation, pension, NHF, payslips, employee portal, and remittance to every authority, with no separate remittance transfer fees.

Every employee gets a clear, accurate payslip. Every deduction goes where it is supposed to go.

Use the free PAYE calculator on Lint to check your own numbers right now. Or explore Lint Payroll if you are managing a team.

Author: Lint Editorial Team
Last updated: 6 July 2026

Sources:

• Nigeria Tax Act 2025, Sixth Schedule — PAYE bands effective 1 January 2026
• Pension Reform Act 2014 — employee/employer contribution rates and pensionable emoluments definition
• National Housing Fund Act — NHF rate and opt-out provisions (BFA 2022)
• National Health Insurance Authority Act 2022 — replaces NHIS Act 2004
• Lint pricing (source of truth) — last updated 4 July 2026

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.