Nigeria PAYE tax bands 2026: how the new bands work, with an example
From 1 January 2026 the Nigeria Tax Act 2025 sets the income tax that employers withhold from pay (PAYE). The Act replaced the old Consolidated Relief Allowance and the old 7% to 24% bands with a tax-free first ₦800,000 a year and six bands that run up to 25%. This guide sets out the bands, shows how a monthly salary of ₦500,000 works through them, and compares the result with the way it was worked out until 2025. It sets out the calculation and its sources.
The six annual bands
Tax is worked out on chargeable income for the year. Each row gives the fixed tax on everything below the band and a rate on the excess over the start of the band. The first ₦800,000 is not taxed, the next ₦2,200,000 is taxed at 15%, the next ₦9,000,000 at 18%, the next ₦13,000,000 at 21%, the next ₦25,000,000 at 23%, and anything above ₦50,000,000 at 25%.
| Chargeable income a year from | Up to | Fixed tax | Rate on the excess |
|---|---|---|---|
| ₦0 | ₦800,000 | ₦0 | nil |
| ₦800,000 | ₦3,000,000 | ₦0 | 15% over ₦800,000 |
| ₦3,000,000 | ₦12,000,000 | ₦330,000 | 18% over ₦3,000,000 |
| ₦12,000,000 | ₦25,000,000 | ₦1,950,000 | 21% over ₦12,000,000 |
| ₦25,000,000 | ₦50,000,000 | ₦4,680,000 | 23% over ₦25,000,000 |
| ₦50,000,000 | and above | ₦10,430,000 | 25% over ₦50,000,000 |
Only the part of income inside a band is taxed at that band's rate. Moving into a higher band does not raise the tax on the income below it. The fixed tax at ₦3,000,000 is ₦330,000, which is 15% of ₦2,200,000.
Chargeable income is not gross pay
Chargeable income is gross pay for the year less the deductions the Act allows: pension contributions, National Housing Fund (NHF) contributions, National Health Insurance Scheme (NHIS) contributions and rent relief. See the guide to those deductions. For an employee who pays the 8% pension contribution and nothing else, the tax-free line is reached at a monthly salary of ₦72,463: pay of ₦72,463 or less has no PAYE, and the first naira above it starts to be taxed at 15%.
A worked example
Take a monthly salary of ₦500,000, with the 8% pension deduction and no rent relief claimed. The year is twelve payments:
| Step, for one year | Amount |
|---|---|
| Gross pay (12 x ₦500,000) | ₦6,000,000.00 |
| Less employee pension (8%) | ₦480,000.00 |
| Chargeable income | ₦5,520,000.00 |
| Tax for the year | ₦783,600.00 |
| PAYE each month (tax / 12) | ₦65,300.00 |
| Net pay each month | ₦394,700.00 |
The chargeable income of ₦5,520,000.00 falls in the 18% band, so the fixed tax of ₦330,000.00 is added to 18% of the ₦2,520,000.00 above ₦3,000,000. The same result comes from adding the slice of each band:
| Band of chargeable income | Amount in the band | Rate | Tax |
|---|---|---|---|
| ₦0 to ₦800,000 | ₦800,000.00 | 0% | ₦0.00 |
| ₦800,000 to ₦3,000,000 | ₦2,200,000.00 | 15% | ₦330,000.00 |
| ₦3,000,000 to ₦5,520,000 | ₦2,520,000.00 | 18% | ₦453,600.00 |
| Tax for the year | ₦5,520,000.00 | ₦783,600.00 |
The PAYE of ₦65,300.00 a month is 13.06% of gross pay, although the last naira earned is taxed at 18%. That leaves ₦394,700.00 a month.
How the bands play out across pay levels
| Monthly pay | Chargeable income a year | Top band | PAYE a month | PAYE share of pay | Net pay a month |
|---|---|---|---|---|---|
| ₦100,000 | ₦1,104,000.00 | 15% | ₦3,800.00 | 3.8% | ₦88,200.00 |
| ₦200,000 | ₦2,208,000.00 | 15% | ₦17,600.00 | 8.8% | ₦166,400.00 |
| ₦500,000 | ₦5,520,000.00 | 18% | ₦65,300.00 | 13.06% | ₦394,700.00 |
| ₦1,000,000 | ₦11,040,000.00 | 18% | ₦148,100.00 | 14.81% | ₦771,900.00 |
| ₦2,500,000 | ₦27,600,000.00 | 23% | ₦439,833.33 | 17.59% | ₦1,860,166.67 |
| ₦5,000,000 | ₦55,200,000.00 | 25% | ₦977,500.00 | 19.55% | ₦3,622,500.00 |
The share of pay taken as PAYE rises slowly with pay, because the tax-free first band matters less as pay grows and each higher band applies only to the slice above it. At ₦100,000 a month PAYE is 3.8% of pay and at ₦5,000,000 a month it is 19.55%.
Compared with the way it was worked out until 2025
Until 2025 the Personal Income Tax Act (as amended in 2011) gave every employee a Consolidated Relief Allowance of the higher of ₦200,000 or 1% of gross pay, plus 20% of gross pay, and taxed what was left from 7% up to 24%. For the same ₦500,000 a month and the same 8% pension, that method gives annual tax of ₦780,800.00, or ₦65,066.67 a month, against ₦65,300.00 under the 2026 bands. That is ₦233.33 a month more under the new rules, before any rent relief. The comparison ignores the old minimum tax and any other old relief.
What PAYE each month means
The calculators divide the annual tax by 12 and treat the salary as the same every month. An employer may work PAYE out differently across the year, and state tax authorities collect it, so a payslip can differ. Overtime, allowances, bonuses and other income are not included.
Not confirmed on an official page: the Nigeria Tax Act 2025 gazette and the Nigeria Revenue Service site could not be opened from this machine, so the bands were read on a law-firm article, a PwC Nigeria summary and a payroll guide that agree with one another. The Sources and rates page says which values that applies to.
Work out your own net paySources
- Nigeria Revenue Service (formerly FIRS): official site, the Act could not be opened there
- PwC Nigeria: summary of the Nigeria Tax Reform Acts (Nigeria Tax Act 2025)
- Legal500 article: personal income tax under the Nigeria Tax Act 2025 (bands, section 30 deductions)
- Payroll guide: Nigeria PAYE 2026 (worked example, CRA repealed)
- Every rate used, with its source and check date: Sources and rates
This calculator is general information only. It uses the pages listed on the Sources page, and your payslip and personal situation may differ. Rates as at 2 November 2026.