Nigeria personal income tax bands from 2026
The Nigeria Tax Act 2025 replaced the old PAYE structure from 1 January 2026. The bands apply to your chargeable income, which is your gross income minus allowable deductions and reliefs.
| Annual chargeable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (up to ₦3m) | 15% |
| Next ₦9,000,000 (up to ₦12m) | 18% |
| Next ₦13,000,000 (up to ₦25m) | 21% |
| Next ₦25,000,000 (up to ₦50m) | 23% |
| Above ₦50,000,000 | 25% |
The first ₦800,000 of chargeable income each year is taxed at zero, which means many low-income earners pay no PAYE at all.
Deductions and reliefs you can claim
- Pension: your 8% contribution under the Pension Reform Act, generally calculated on basic salary, housing and transport allowances, plus approved voluntary contributions.
- National Housing Fund (NHF): 2.5% of basic salary, where you contribute.
- Rent relief: 20% of the annual rent you pay, up to ₦500,000. Keep your tenancy agreement or receipts as proof.
- Other allowable deductions: National Health Insurance contributions, life insurance or deferred annuity premiums, and interest on a loan for your owner-occupied home, with proof.
Coverage of the reform describes the old Consolidated Relief Allowance (CRA) as replaced by the new structure, with rent relief and the zero-rate first band providing relief instead, so this calculator does not apply CRA. If your payroll still shows CRA for 2026, ask your employer which rules they are applying.
How PAYE is calculated, step by step
- Add up annual gross pay: basic, housing, transport and other taxable allowances.
- Subtract deductions: pension, NHF, rent relief and any other allowable items.
- Apply the bands to the chargeable income that remains.
- Divide by 12 for the monthly PAYE deducted by your employer.
Worked example
Using the figures from a BusinessDay example: a worker earning ₦300,000 a month (₦3.6 million a year) pays ₦600,000 rent a year. Rent relief is ₦120,000 (20% of rent). Pension is ₦288,000 and NHF ₦90,000 (that example applied NHF to gross pay), so total deductions are ₦498,000 and chargeable income is ₦3,102,000.
| First ₦800,000 at 0% | ₦0 |
| Next ₦2,200,000 at 15% | ₦330,000 |
| Remaining ₦102,000 at 18% | ₦18,360 |
| Annual PAYE | ₦348,360 (₦29,030 a month) |
Tips to make sure you are not overpaying
- Claim rent relief. Give your employer or tax authority proof of rent so it is applied in payroll.
- Check your pension base. Pension is a deduction, so a correct base lowers your tax.
- Keep receipts for insurance premiums and mortgage interest you want to claim.
- Check your payslip in January and after any pay rise, when payroll systems are most often wrong.
For official guidance on the reforms, see the Federal Inland Revenue Service and your State Internal Revenue Service, which collects PAYE from employees.
Frequently asked questions
What are the new PAYE tax bands in Nigeria for 2026?
0% on the first ₦800,000, then 15%, 18%, 21%, 23% and 25% on higher bands, with 25% on chargeable income above ₦50 million.
Who pays no PAYE in 2026?
Anyone whose chargeable income after deductions is ₦800,000 a year or less pays no PAYE, because that band is taxed at 0%.
How much is rent relief?
20% of the annual rent you pay, capped at ₦500,000, with proof such as a tenancy agreement or receipts.
Is pension deducted before tax?
Yes. Your statutory pension contribution is deducted before the tax bands are applied.
Is this calculator official?
No. It is a free estimate. Your employer and State Internal Revenue Service determine the final PAYE.