What is the PAYE zero-tax threshold in Nigeria 2026?

Under the Nigeria Tax Act 2025, the first ₦800,000 of taxable income (after CRA, pension and NHF deductions) is taxed at 0%. This means many lower-income earners pay little or no personal income tax.

Is pension contribution deducted before PAYE?

Yes. Employee pension contributions (8% of basic + housing + transport) are deducted from gross income before computing taxable income, reducing your tax bill. The employer also contributes 10% but this does not affect your personal tax calculation.

What is NHF and is it compulsory?

The National Housing Fund (NHF) contribution is 2.5% of basic salary. It is compulsory for employees earning the minimum wage or above and entitles you to access subsidised Federal Mortgage Bank housing loans. It is deductible for PAYE purposes.

PAYE Tax Calculator 2026

Calculate your Nigerian income tax using the latest NTA 2025 bands. Enter your gross salary to see net pay, deductions and effective tax rate instantly.

Gross Monthly Salary

₦

Include NHF (2.5% of basic)

Basic (%)

Housing (%)

Transport (%)

Net Monthly Take-Home

₦292,981

Monthly Tax (PAYE)

₦24,644

Pension (Employee 8%)

₦28,000

NHF (2.5% Basic)

₦4,375

Annual Tax

₦295,725

Effective Rate

7.0%

Marginal Rate

15.0%

How to Use This Calculator

Calculate Tax Tab

Enter your gross monthly salary — the figure before any deductions. Toggle NHF on or off depending on whether your employer deducts it. Use "More options" to adjust your salary structure (Basic / Housing / Transport split). Results — net take-home, monthly tax, effective rate — update instantly.

Compare Salary Tab

Enter two different salaries side by side to see the tax difference. Useful when evaluating a job offer or salary negotiation. The after-tax difference is often much smaller than the gross difference once PAYE kicks in.

Tax Breakdown Tab

Shows every deduction line by line: CRA, pension, NHF, then each tax band applied to your taxable income. Great for understanding exactly where your money goes and discussing deductions with your HR or payroll team.

2026 PAYE Tax Bands (NTA 2025)

The Nigeria Tax Act 2025 updated the income tax bands effective from 1 January 2026. The first ₦800,000 of taxable income carries a 0% rate, providing significant relief for lower earners.

Taxable Income Band	Rate	Max Tax in Band	Cumulative Tax
First ₦800,000	0%	₦0	₦0
Next ₦2,200,000	15%	₦330,000	₦330,000
Next ₦9,000,000	18%	₦1,620,000	₦1,950,000
Next ₦13,000,000	21%	₦2,730,000	₦4,680,000
Next ₦25,000,000	23%	₦5,750,000	₦10,430,000
Above ₦50,000,000	25%	Unlimited	—

Important: These bands apply to taxable income — that is gross income minus CRA, pension, and NHF — not your gross salary.

The Formula

Step 1: CRA = Max(₦200,000, Gross × 1%) + Gross × 20% Step 2: Pension = (Basic + Housing + Transport) × 8% Step 3: NHF = Basic × 2.5% (if applicable) Step 4: Taxable Income = Gross − CRA − Pension − NHF Step 5: Apply progressive bands to Taxable Income → Annual Tax Step 6: Net Annual = Gross − Pension − NHF − Annual Tax Step 7: Net Monthly = Net Annual ÷ 12

All calculations follow the Personal Income Tax Act (PITA) as amended by the Nigeria Tax Act 2025. The calculator uses the standard salary structure (50% Basic / 25% Housing / 25% Transport) for pension and NHF computation by default.

Example

Senior Developer, Lagos — ₦350,000/month gross

Gross Annual₦4,200,000

CRA-₦1,042,000

Pension (8%)-₦336,000

NHF (2.5% Basic)-₦52,500

Taxable Income₦2,769,500

Tax on first ₦800K (0%)₦0

Tax on next ₦1,969,500 (15%)₦295,425

Annual Tax₦295,425

Monthly Tax (PAYE)₦24,619

Net Monthly Take-Home≈ ₦286,000

Effective Tax Rate7.0%

Nigeria's progressive system means even at ₦350K/month, the effective rate remains relatively modest due to the generous CRA and zero-rate band.

Key Deductions Explained

Consolidated Relief Allowance (CRA)

CRA is the single largest deduction for most earners. It equals the higher of ₦200,000 or 1% of gross income, plus an additional 20% of gross income. For a ₦500,000/month earner, CRA is about ₦1,253,000 annually.

Pension Contribution

Under the Pension Reform Act, employees contribute 8% of (Basic + Housing + Transport). This is deducted before tax, effectively subsidising retirement savings. Employers add 10% on top.

National Housing Fund (NHF)

2.5% of basic salary goes to the NHF, managed by the Federal Mortgage Bank of Nigeria (FMBN). Contributions make you eligible for low-interest housing loans (currently at 6% p.a.). It is also tax-deductible.

FAQ

PAYE (Pay As You Earn) is specifically for employees whose employers deduct and remit tax on their behalf. Self-employed individuals file their personal income tax directly with FIRS or their State Internal Revenue Service. The same tax bands apply but they pay by direct assessment.

It is your employer's legal obligation to deduct and remit PAYE to the relevant State IRS. Failure to do so makes the employer liable for penalties. You should still declare your income and pay tax — FIRS offers an online self-assessment portal. Underpaid tax can attract interest and penalties when discovered.

Yes — the first ₦800,000 of taxable income is taxed at 0% for all employees regardless of salary level. Note this applies to taxable income (after CRA, pension, NHF), not gross income. Most people earning below ₦200,000/month end up with zero or minimal PAYE liability.

Yes, most bonuses and taxable allowances (performance bonuses, 13th month, etc.) are subject to PAYE. Housing and transport allowances may be structured as part of the salary package and typically included in gross income. Reimbursable expenses with receipts are generally not taxable.

Employers must remit PAYE deductions to the relevant State Internal Revenue Service within 10 days of the end of each month. Late remittance attracts a penalty of 10% of the unpaid tax plus interest at the prevailing MPR rate.