How to Calculate PAYE Tax in Nigeria (2026)
PAYE Nigeria changed significantly on 1 January 2026. If your payroll still runs on the old 7%–24% bands, you’re computing wrong — and so is every blog post written before the Nigeria Tax Act 2025 kicked in.
This guide shows you the correct 2026 calculation, step by step, with real naira numbers.
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Quick Answer
The Nigeria Tax Act 2025 (NTA 2025) replaced the Personal Income Tax Act (PITA) effective 1 January 2026. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] Under the new law, the first ₦800,000 of annual chargeable income is taxed at 0%, and the top rate is 25% on income above ₦50,000,000 [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025 Sixth Schedule]. The old Consolidated Relief Allowance (CRA) — formerly ₦200,000 + 20% of gross income — does not apply to 2026 onward. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
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What You’ll Need
- Employee’s gross salary breakdown (Basic, Housing, Transport, Other Allowances)
- Employee’s pension deduction (8% of Basic + Housing + Transport)
- Whether the employee contributes to NHF
- Annual rent paid by the employee (for rent relief, if applicable)
- A payroll tool or spreadsheet — or Lint Payroll
Estimated time: 10–20 minutes per employee manually. With Lint: automatic.
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The 2026 PAYE Tax Bands (NTA 2025)
Many pre-2026 sources — including some government pages and most blog content from 2024–2025 — still describe the old PITA regime. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] Here are the correct 2026 bands:
| Annual Chargeable Income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (₦800,001 – ₦3,000,000) | 15% |
| Next ₦9,000,000 (₦3,000,001 – ₦12,000,000) | 18% |
| Next ₦13,000,000 (₦12,000,001 – ₦25,000,000) | 21% |
| Next ₦25,000,000 (₦25,000,001 – ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
[SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)]
[SOURCE: NTA 2025 Sixth Schedule]
The old bands (7%, 11%, 19%, 24%) are gone. Stop using them.
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How to Calculate PAYE in Nigeria: Step by Step
Step 1 — Compute Annual Gross Emoluments
Add up annual gross emoluments: Basic + Housing + Transport + Other Allowances. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
Example employee — Amaka, Lagos:
| Component | Monthly | Annual |
|---|---|---|
| Basic | ₦150,000 | ₦1,800,000 |
| Housing | ₦60,000 | ₦720,000 |
| Transport | ₦40,000 | ₦480,000 |
| Gross | ₦250,000 | ₦3,000,000 |
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Step 2 — Deduct Pension (Employee Contribution)
The employee pension rate is 8% of pensionable emoluments, which is Basic + Housing + Transport — not gross salary. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: PRA 2014]
Amaka’s pensionable emoluments = ₦1,800,000 + ₦720,000 + ₦480,000 = ₦3,000,000
Employee pension = 8% × ₦3,000,000 = ₦240,000 [SOURCE: PRA 2014]
Common mistake: Many payrolls calculate pension on total gross including other allowances. That’s wrong — pension is on Basic + Housing + Transport only.
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Step 3 — Apply Rent Relief (If Applicable)
Rent relief under NTA 2025 is 20% of annual rent paid by the employee, capped at ₦500,000. The employee files for the relief and the employer applies it to the PAYE computation. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
Assume Amaka pays ₦600,000 in annual rent:
Rent relief = 20% × ₦600,000 = ₦120,000 (under the ₦500,000 cap, so the full ₦120,000 applies)
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Step 4 — Calculate Annual Chargeable Income
Subtract statutory deductions (employee pension, NHF, NHIS where applicable) and reliefs (rent relief) from gross emoluments to get chargeable income. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
| Amount | |
|---|---|
| Annual Gross | ₦3,000,000 |
| Less: Pension (8%) | –₦240,000 |
| Less: Rent Relief | –₦120,000 |
| Annual Chargeable Income | ₦2,640,000 |
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Step 5 — Apply the PAYE Tax Bands
Apply the NTA 2025 bands to the chargeable income on an annual basis. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025 Sixth Schedule]
Amaka’s chargeable income = ₦2,640,000
| Band | Amount Taxed | Rate | Tax |
|---|---|---|---|
| First ₦800,000 | ₦800,000 | 0% | ₦0 |
| Next ₦1,840,000 (₦800K–₦2.64M) | ₦1,840,000 | 15% | ₦276,000 |
| Annual PAYE | ₦276,000 |
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Step 6 — Divide by 12 for Monthly Deduction
Divide the annual PAYE by 12 to get the monthly deduction. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
Monthly PAYE = ₦276,000 ÷ 12 = ₦23,000/month
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Full Cost Table: What Leaves Amaka’s Payslip Monthly
| Deduction | Calculation | Monthly Amount |
|---|---|---|
| Employee Pension (8%) | 8% × ₦250,000 | ₦20,000 |
| PAYE | Annual ÷ 12 | ₦23,000 |
| Total Deductions | ₦43,000 | |
| Net Pay (Take-Home) | ₦207,000 |
NHF is not included here — under the Business Facilitation Act 2022, private-sector employees can opt out of NHF. Treat it as opt-in per employee, not a default deduction. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: National Housing Fund Act]
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Employer Obligations: What You Also Owe
Your employee’s deduction is only half the picture. As the employer:
- Employer pension: 10% of (Basic + Housing + Transport) [SOURCE: PRA 2014]
Amaka’s employer pension = 10% × ₦3,000,000 = ₦300,000/year (₦25,000/month)
- PAYE remittance deadline: The 10th day of the month following the month of deduction. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025 / remittance schedule]
- Pension remittance deadline: Within 7 working days of salary payment. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: PRA 2014]
- Annual employer return (Form H1): 31 January for the prior tax year. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)]
Miss any of these and the PRA 2014 penalty is 2% of unpaid contributions per month. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: PRA 2014]
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Key Changes From the Old PITA Regime (Don’t Get These Wrong)
If you used the old system, here’s what changed on 1 January 2026:
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. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
| What Changed | Old PITA (Pre-2026) | NTA 2025 (2026 onward) |
|---|---|---|
| Tax-free threshold | No 0% band | First ₦800,000 at 0% |
| Lowest taxed rate | 7% | 15% |
| Highest rate | 24% | 25% |
| CRA | ₦200,000 + 20% of gross | Eliminated |
| Rent relief | None | 20% of rent, capped ₦500,000 |
| Gratuity | Tax-exempt | Now taxable |
[SOURCE: NTA 2025; NTA 2025 Sixth Schedule]
The CRA — formerly ₦200,000 + 20% of gross income — does not apply to 2026 onward. Any content written for the 2026+ tax regime must not include CRA in PAYE calculations. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)]
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Common Mistakes Nigerian Business Owners Make on PAYE
1. Still using the old PITA bands
The 7%–24% bands are dead. Using them overstates tax for lower earners and slightly understates it at the top. Both get you into trouble.
2. Computing pension on total gross salary
Pension is on Basic + Housing + Transport. If you include meal allowances, vehicle allowances, or sitting fees in the base, you’re calculating wrong. [SOURCE: PRA 2014]
3. Applying CRA to 2026 payroll
The CRA is eliminated. The ₦200,000 + 20% of gross formula no longer exists in 2026 tax computation. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
4. Treating NHIS as a fixed 5% + 10% formula
There is no longer a single statutory ‘5% employee + 10% employer of basic’ formula. Premiums vary by the chosen HMO plan. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NHIA Act 2022]
5. Missing the PAYE remittance deadline
The 10th of the following month is firm. Most small businesses remit late because payroll is still manual. An automated system fixes this entirely.
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How Lint Handles PAYE for Your Business
Running payroll manually is a 2–4 hour job per month, per business. And one wrong formula means you’re resubmitting to the state tax authority and apologising to employees about amended payslips.
Lint Payroll covers PAYE computation, pension, NHF, payslips, remittance, and salary advances — all for ₦500 per employee per payroll run. [SOURCE: Lint pricing (source of truth)] [SOURCE: Lint pricing] Salary disbursement is free to a Lint account and ₦40 to any other Nigerian bank. [SOURCE: Lint pricing (source of truth)] [SOURCE: Lint pricing]
For context: if you have 5 employees, that’s ₦2,500 per payroll run for compliant PAYE, correct pension deductions, payslips, and remittance filing — all handled. No more chasing the formula.
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FAQs: PAYE Nigeria 2026
What is PAYE tax in Nigeria?
PAYE (Pay As You Earn) is the system Nigerian employers use to deduct income tax from employees’ salaries monthly and remit it to the state tax authority. It’s governed by the Nigeria Tax Act 2025 from 1 January 2026 onward. [SOURCE: NTA 2025]
What is the minimum salary to pay PAYE in Nigeria in 2026?
The first ₦800,000 of annual chargeable income is taxed at 0% [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] — that’s roughly ₦66,667/month. [SOURCE: NTA 2025 Sixth Schedule] Anyone earning below that effective threshold (after deductions) pays no income tax.
What are the 2026 PAYE rates in Nigeria?
The bands under NTA 2025 run from 0% (first ₦800,000) to 25% (above ₦50,000,000). The first taxable band is 15%, not 7%. [SOURCE: NTA 2025 Sixth Schedule]
How is pension calculated for PAYE purposes?
Employee pension is 8% of Basic + Housing + Transport allowances — not gross salary. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: PRA 2014] This pension deduction reduces the employee’s chargeable income before PAYE bands are applied.
When is PAYE due in Nigeria?
PAYE must be remitted by the 10th day of the month following the month of deduction. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025 / remittance schedule] The annual employer return (Form H1) is due 31 January.
Is gratuity still tax-exempt in 2026?
No. Gratuity is now taxable under NTA 2025. This is one of the most missed changes from the old PITA regime. [SOURCE: NTA 2025]
Can employees claim NHF deductions?
Under the Business Facilitation Act 2022, private-sector employees can opt out of NHF. Treat it as opt-in per employee, not a default deduction. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: National Housing Fund Act]
What replaced the Consolidated Relief Allowance (CRA)?
The CRA was replaced by two things: a tax-free threshold of the first ₦800,000 at 0%, and a rent relief of 20% of annual rent paid, up to ₦500,000. [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025]
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Related Tools
- Lint Payroll → — PAYE computation, pension, payslips, and remittance in one place
- Free PAYE Calculator → — Work out take-home pay, PAYE, pension, and rent relief in seconds
- Nigeria Revenue Service (NRS) → — Official tax authority for PAYE filings and employer queries
- PenCom CRS → — Pension remittance portal
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Bottom Line
The 2026 PAYE calculation is genuinely more employee-friendly than the old PITA system — the 0% band on the first ₦800,000 means lower earners keep more take-home. But the correct formula matters. One wrong assumption (wrong bands, wrong pension base, leftover CRA) means recomputing, reremitting, and explaining yourself to employees and the tax authority.
Do it right once. Then automate it.
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Published: May 2026 | Reviewed against: Nigeria Tax Act 2025 (Sixth Schedule), Pension Reform Act 2014, National Housing Fund Act, NHIA Act 2022 | Regulatory data sourced from the NTA 2025-aligned locked facts document. For the latest FIRS/NRS guidance, visit nrs.gov.ng.
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.
