PAYE Tax in Nigeria 2026: New Rates, Reliefs and Your Take-Home Pay
Quick answer: Since 1 January 2026, PAYE in Nigeria is charged under the Nigeria Tax Act 2025. The first ₦800,000 of your annual taxable income is taxed at 0%, the next ₦2.2 million at 15%, then 18%, 21%, 23% and finally 25% on income above ₦50 million. Anyone earning the national minimum wage (₦70,000 a month) or less pays no PAYE at all. The old Consolidated Relief Allowance has gone; in its place you can deduct your pension, NHF and health-insurance contributions plus a new rent relief of 20% of your annual rent, capped at ₦500,000. For most salaried Nigerians earning under ₦1 million a month, the result is a lower monthly tax deduction than in 2025.
This guide explains, in plain language, how your employer now works out the tax on your payslip, which deductions you are entitled to, and what three typical salaries look like after tax in 2026. It is a general explainer, not personal tax advice.
What changed in PAYE from January 2026?
PAYE (Pay-As-You-Earn) is simply personal income tax that your employer deducts from your salary each month and remits to the tax authority of the state where you live. The system itself has not changed. What changed is the law behind the numbers: the Nigeria Tax Act 2025, signed in June 2025, replaced the Personal Income Tax Act for income earned from 1 January 2026.
The main differences for employees are:
A tax-free band. The first ₦800,000 of annual taxable income is now taxed at 0%. Under the old law the lowest band (the first ₦300,000) was taxed at 7%.
Fewer low earners in the net. Workers earning the national minimum wage of ₦70,000 a month or less are fully exempt from PAYE.
No more Consolidated Relief Allowance (CRA). The CRA, which was ₦200,000 or 1% of gross income (whichever was higher) plus 20% of gross income, has been abolished.
A new rent relief. You can deduct 20% of the rent you actually paid in the year, up to a maximum of ₦500,000.
A higher top rate. Income above ₦50 million a year is taxed at 25%, up from 24%.
PAYE tax bands and rates for 2026
Tax is charged progressively on your taxable income (gross pay minus allowable deductions). Each slice of income is taxed only at its own rate; moving into a higher band never increases the tax on the income below it.
First ₦800,000 – 0%
Next ₦2,200,000 (₦800,001 to ₦3,000,000) – 15%
Next ₦9,000,000 (₦3,000,001 to ₦12,000,000) – 18%
Next ₦13,000,000 (₦12,000,001 to ₦25,000,000) – 21%
Next ₦25,000,000 (₦25,000,001 to ₦50,000,000) – 23%
Above ₦50,000,000 – 25%
A useful shortcut: someone whose taxable income is exactly ₦3 million a year pays ₦330,000 in tax (₦0 on the first ₦800,000 and ₦330,000 on the next ₦2.2 million). Anyone with taxable income up to ₦12 million pays that ₦330,000 plus 18% of whatever sits above ₦3 million.
Which deductions reduce your taxable income?
Section 30 of the Nigeria Tax Act lists the amounts an employee can subtract from gross income before the bands are applied. You will usually need evidence (payslips, receipts or a tenancy agreement) for your employer or the state revenue service to allow them.
Pension contributions. Your own 8% contribution under the Pension Reform Act 2014, calculated on basic salary plus housing and transport allowances. The employer's 10% share is not part of your taxable income.
National Housing Fund (NHF). The 2.5% of basic salary deducted for the NHF.
Health insurance. Your contributions to the National Health Insurance scheme.
Rent relief. 20% of the annual rent you actually paid, capped at ₦500,000. On rent of ₦1 million a year, the relief is ₦200,000; on rent of ₦2.5 million or more, it is the maximum ₦500,000. You must declare the true rent paid.
Life insurance or annuity premiums on your own life or your spouse's life.
Interest on a loan used to build or buy a house you live in yourself.
Two things are commonly misunderstood. First, rent relief is not automatic: if you have not told HR what you pay in rent, it is probably not on your payslip. Second, the development levy introduced by the new tax laws is charged on companies, not deducted from employees' salaries.
How to calculate your PAYE in 2026: step by step
Add up your annual gross pay. Basic salary plus housing, transport and any other regular taxable allowances, multiplied by 12. Bonuses and most benefits-in-kind are taxable too.
Subtract your deductions. Employee pension (8% of basic, housing and transport), NHF (2.5% of basic) if it applies to you, health-insurance contributions, and rent relief (20% of rent, maximum ₦500,000).
The result is your taxable income.
Apply the bands. 0% on the first ₦800,000, 15% on the next ₦2.2 million, 18% on the next ₦9 million, and so on.
Divide by 12 to get the monthly PAYE your employer should deduct.
Your monthly take-home pay is then gross pay minus pension, NHF (where applicable) and PAYE.
Three worked examples (2026 rules)
For simplicity these examples assume the whole salary is made up of basic, housing and transport (so pension is 8% of gross), no NHF or health-insurance deduction, and that the employee has declared their rent. Your own figures will differ with your pay structure.
Example 1: ₦150,000 a month (₦1.8 million a year), rent ₦600,000
Pension (8%): ₦144,000
Rent relief (20% of ₦600,000): ₦120,000
Taxable income: ₦1,536,000
Tax: 0% on ₦800,000, then 15% on ₦736,000 = ₦110,400 a year
Monthly PAYE: about ₦9,200
Monthly take-home after pension and tax: about ₦128,800 (effective tax rate 6.1%)
Example 2: ₦400,000 a month (₦4.8 million a year), rent ₦1.5 million
Pension (8%): ₦384,000
Rent relief (20% of ₦1.5 million): ₦300,000
Taxable income: ₦4,116,000
Tax: ₦330,000 on the first ₦3 million, plus 18% on ₦1,116,000 (₦200,880) = ₦530,880 a year
Monthly PAYE: about ₦44,240
Monthly take-home: about ₦323,760 (effective tax rate 11.1%)
Example 3: ₦1,000,000 a month (₦12 million a year), rent ₦3 million
Pension (8%): ₦960,000
Rent relief: capped at ₦500,000 (20% of ₦3 million would be ₦600,000)
Taxable income: ₦10,540,000
Tax: ₦330,000 on the first ₦3 million, plus 18% on ₦7,540,000 (₦1,357,200) = ₦1,687,200 a year
Monthly PAYE: about ₦140,600
Monthly take-home: about ₦779,400 (effective tax rate 14.1%)
Notice how the 0% band does most of the work for lower earners: at ₦150,000 a month the effective rate is around 6%, compared with roughly 11% and 14% at ₦400,000 and ₦1 million a month.
Who pays no PAYE at all?
Employees earning the national minimum wage (₦70,000 a month) or less.
Anyone whose taxable income, after deductions, is ₦800,000 a year or less.
Pensions and gratuities paid under the Pension Reform Act are exempt from tax.
Compensation for loss of employment is exempt up to ₦50 million (previously ₦10 million).
If you are a corps member rather than an employee, the ₦77,000 federal allowance is paid and treated differently from a salary; our NYSC allowance guide explains how it works.
What to check on your payslip this year
Is your taxable income right? Confirm that pension and NHF have been deducted before the bands were applied.
Has rent relief been applied? If not, send HR proof of your rent (tenancy agreement or receipts) and ask for it to be included.
Is the CRA still appearing? It should not. A payroll system still applying 2025 rules may be over- or under-deducting.
Is tax going to the right state? PAYE is paid to the state where you live, not where your office is. Remote workers employed by Lagos companies but living elsewhere should check this (see our remote jobs in Nigeria guide).
Keep your records. Deductions are only allowed with documentary evidence.
How the new rules affect job offers and negotiations
When you compare job offers in 2026, think in take-home terms. Because pension and rent relief are deducted from gross, two offers with the same gross figure can produce different net pay depending on how the package is split between basic salary and allowances. Ask prospective employers for a sample payslip or a net-pay estimate before accepting. Graduates moving into their first role can read our guides on getting a bank job as a fresh graduate and the ₦70,000 minimum wage for context on entry-level pay.
Frequently asked questions
Is the first ₦800,000 tax-free for everyone?
Yes. The 0% band applies to every individual taxpayer, regardless of total income. Higher earners simply pay the higher rates on the slices above ₦800,000.
How is the rent relief calculated?
Take 20% of the rent you actually paid in the year; if that figure is more than ₦500,000, the relief is limited to ₦500,000. You must declare your real rent, and false declarations can attract penalties.
Has the Consolidated Relief Allowance been removed?
Yes. From 1 January 2026 the CRA no longer exists. It was replaced by the ₦800,000 tax-free band, rent relief and the specific deductions listed above.
Do I still pay PAYE if I earn ₦70,000 a month?
No. Employees earning the national minimum wage of ₦70,000 a month or less are exempt from PAYE under the new law.
Will my take-home pay go up or down in 2026?
For most salaried workers below roughly ₦1 million a month, the new bands and the ₦800,000 tax-free threshold reduce the tax deducted, even without the CRA. Very high earners (above ₦50 million a year) now face a 25% top rate and lose the CRA, so their tax bill may rise. Use the step-by-step method above with your own figures.
Sources
PwC Worldwide Tax Summaries – Nigeria: taxes on personal income (rate bands and minimum-wage exemption)
PwC Worldwide Tax Summaries – Nigeria: significant developments (Nigeria Tax Act effective 1 January 2026, CRA removal, rent relief)
Vi-M Professional Solutions – What happens to my salary under the new Tax Act?
Find a job that pays what you are worth
Now that you know how to read your payslip, compare live openings and salaries on Jobsiz: browse jobs in Nigeria, accountant jobs in Nigeria and finance jobs in Nigeria, or explore more guides in our Salary & Pay section.
By the Jobsiz Editorial Team · Updated 26 October 2026. This article is general information, not tax or legal advice; confirm your own position with your employer's payroll team or a licensed tax adviser.
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