PAYE calculator Nigeria 2026
Work out PAYE, pension and take-home pay under the new tax bands that took effect on 1 January 2026, including the ₦800,000 tax-free threshold and rent relief.
Monthly take-home pay
₦394,700
- Gross pay
- ₦500,000
- Pension (8%)
- −₦40,000
- PAYE tax
- −₦65,300
- Take-home
- ₦394,700
- Annual PAYE
- ₦783,600
- Effective tax rate
- 13.1%
- Annual taxable income
- ₦5,520,000
- Employer pension (10%)
- ₦50,000
Free, no sign-up. Estimates based on Nigerian rules as of 2026. Not tax advice. See our terms.
How to calculate PAYE in Nigeria
PAYE is worked out on annual taxable income using the 2026 bands in the Nigeria Tax Act 2025, then divided by 12 for the monthly deduction.
- 1
Find annual gross pay
Monthly gross (basic + housing + transport + other taxable allowances) × 12.
- 2
Subtract pension and NHF
Deduct the employee's 8% pension contribution, and 2.5% NHF if they're registered.
- 3
Subtract rent relief
Deduct 20% of the annual rent the employee pays, up to ₦500,000, with evidence.
- 4
Apply the tax bands
0% on the first ₦800,000, 15% on the next ₦2.2m, 18% up to ₦12m, 21% up to ₦25m, 23% up to ₦50m and 25% above.
- 5
Divide by 12
The annual tax ÷ 12 is the PAYE to deduct each month and remit to the State IRS by the 10th.
Worked example: ₦500,000 a month, ₦1.2m rent
| Annual gross | ₦6,000,000 |
|---|---|
| Less pension (8%) | −₦480,000 |
| Less rent relief (20% of ₦1.2m) | −₦240,000 |
| Taxable income | ₦5,280,000 |
| Tax: 15% × ₦2.2m + 18% × ₦2.28m | ₦740,400 |
| Monthly PAYE | ₦61,700 |
| Monthly take-home | ₦398,300 |
Questions
How is PAYE calculated in Nigeria in 2026?
Take annual gross pay, subtract pension (8%), NHF and rent relief, then apply the bands: 0% on the first ₦800,000, 15% on the next ₦2.2m, 18% to ₦12m, 21% to ₦25m, 23% to ₦50m and 25% above. Divide by 12 for monthly PAYE.
What is the tax-free threshold in Nigeria?
The first ₦800,000 of annual taxable income is taxed at 0% from 1 January 2026.
What is rent relief?
20% of the annual rent an employee pays, up to ₦500,000, deducted before PAYE is calculated. It replaced the Consolidated Relief Allowance.
Do minimum wage earners pay PAYE?
Generally no. At ₦70,000 a month, taxable income after pension is below the ₦800,000 tax-free threshold.
Where is PAYE paid?
To the State Internal Revenue Service of the state where the employee lives, by the 10th of the following month.
Related guides
- How to calculate PAYE in Nigeria (2026 tax bands, worked examples)
- Payroll in Nigeria: a first-time employer's guide (PAYE, pension, NHF, NSITF, ITF)
- Employee or contractor? Tax, pension and legal risk for Nigerian companies
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