Calculates the capital gains tax (CGT) due on the sale of assets like property, shares, or business assets in Nigeria, based on the Capital Gains Tax Act and relevant Finance Acts.
Free, no sign-up
Calculate →
Nigeria PAYE Tax Calculator 2026
This calculator helps you estimate your annual Personal Income Tax (PAYE) and net salary in Nigeria for the 2026 tax year, based on the provisions of the Nigeria Tax Act 2025. Understanding your tax liability is crucial for financial planning, salary negotiations, and ensuring compliance with the Federal Inland Revenue Service (FIRS).
How PAYE Tax is Calculated in Nigeria
The PAYE (Pay As You Earn) system requires employers to deduct tax from employees' salaries each pay period. The annual tax calculation follows these steps:
- Calculate Gross Income: Sum your annual basic salary, housing allowance, transport allowance, and any other taxable allowances.
- Calculate Allowable Deductions: Certain contributions are deducted from your gross income before tax is applied:
- Pension: Contributions to a Registered Pension Scheme (RSA) are deductible up to 20% of your basic salary.
- National Housing Fund (NHF): Contributions are deductible up to 2.5% of your basic salary.
- Health Insurance: Premiums paid under the National Health Insurance Scheme (NHIS) or a registered health maintenance organization (HMO) are fully deductible.
- Rent Relief: You can claim 20% of the annual rent paid for your primary residence, up to a maximum relief of ₦500,000.
- Apply the Tax-Free Threshold: The first ₦800,000 of your income after deductions is not subject to tax.
- Apply Progressive Tax Rates: The remaining income, known as chargeable income, is taxed using the following brackets for 2026:
Chargeable Income Bracket (₦) Tax Rate First 800,000 0% Next 800,000 7% Next 1,600,000 11% Next 3,200,000 15% Next 6,400,000 19% Next 12,800,000 21% Over 25,600,000 24%
Example Calculation
Let's calculate the tax for Chinedu, a mid-level professional:
- Basic Salary: ₦6,000,000
- Housing Allowance: ₦2,400,000
- Transport Allowance: ₦600,000
- Other Allowances: ₦500,000
- Pension Contribution: ₦1,200,000
- NHF Contribution: ₦150,000
- Health Insurance: ₦120,000
- Rent Paid: ₦2,400,000
Step 1: Gross Income = 6,000,000 + 2,400,000 + 600,000 + 500,000 = ₦9,500,000
Step 2: Allowable Deductions
Pension (capped at 20% of basic: ₦1,200,000): ₦1,200,000
NHF (capped at 2.5% of basic: ₦150,000): ₦150,000
Health Insurance: ₦120,000
Rent Relief (20% of ₦2.4M = ₦480,000, below cap): ₦480,000
Total Deductions & Reliefs = ₦1,950,000
Step 3: Chargeable Income = Gross Income (₦9,500,000) - Total Reliefs (₦1,950,000) - Tax-Free Threshold (₦800,000) = ₦6,750,000
Step 4: Annual Tax (using brackets):
First ₦800,000 @ 0% = ₦0
Next ₦800,000 @ 7% = ₦56,000
Next ₦1,600,000 @ 11% = ₦176,000
Next ₦3,200,000 @ 15% = ₦480,000
Remaining ₦350,000 (₦6,750,000 - ₦6,400,000) @ 19% = ₦66,500
Total Annual PAYE Tax = ₦778,500
Step 5: Net Annual Income = ₦9,500,000 - ₦778,500 = ₦8,721,500
Common Scenarios
Entry-Level Employees: Often have a chargeable income below or just above the tax-free threshold, resulting in little to no tax liability, especially if they claim rent relief.
High-Income Earners: Maximizing pension contributions (up to the 20% limit) and ensuring NHF and health insurance payments are made can significantly reduce chargeable income and lower the effective tax rate.
Next Steps: Formalize Your Employment
Once you understand your compensation and tax implications, it's important to have a clear, written agreement with your employer. An Employment Agreement or Employment Offer Letter formally outlines your job role, salary, benefits, and other terms, protecting both you and your employer.