Old vs New PAYE Tax Comparison

See exactly how much less (or more) tax you pay under Nigeria's 2026 PAYE bands versus the previous 6-band structure.

Salary Details

Gross Monthly Salary

₦

Item	Old Structure	New 2026
Gross Annual	₦3,600,000	₦3,600,000
Taxable Income	₦2,536,000	₦2,536,000
Annual PAYE Tax	₦420,560	₦260,400
Monthly PAYE Tax	₦35,047	₦21,700
Effective Tax Rate	11.7%	7.2%

Annual Tax Saving (New vs Old)

₦160,160

Monthly Tax Difference

₦13,347

Annual Tax Difference

₦160,160

How to Use This Calculator

Enter your gross monthly salary. The calculator computes your taxable income (after CRA and pension deductions) and then applies both the old 6-band PAYE rates and the new 2026 bands side by side. You instantly see which structure is cheaper and by how much per month and per year.

Old vs New PAYE Bands

OLD (6-band) PAYE Structure: First ₦300,000 @ 7% Next ₦300,000 @ 11% Next ₦500,000 @ 15% Next ₦500,000 @ 19% Next ₦1,600,000 @ 21% Above ₦3,200,000 @ 24% NEW (2026) PAYE Bands: First ₦800,000 @ 0% (tax-free band) Next ₦2,200,000 @ 15% Next ₦9,000,000 @ 18% Next ₦13,000,000 @ 21% Next ₦25,000,000 @ 23% Above ₦50,000,000 @ 25% Both applied to: Taxable Income = Gross − CRA − Pension

The most significant change in the 2026 structure is the introduction of a ₦800,000 tax-free band. Employees earning below ₦800,000 in taxable income pay zero PAYE tax. This particularly benefits lower and middle-income workers.

Example

Scenario: Middle-Income Employee

Blessing earns ₦300,000 gross monthly (₦3.6M annually). After CRA and pension deductions, her taxable income is approximately ₦2.5M per annum.

Gross monthly salary₦300,000

Annual taxable income (approx.)≈ ₦2,500,000

Annual PAYE (old structure)≈ ₦170,000

Annual PAYE (new 2026)≈ ₦255,000

At this income level, the new zero-rated band provides relief but the higher rates on income above ₦800K may result in a slightly different outcome. Use the calculator above to see your exact numbers.

Who Benefits Most from the 2026 Changes?

Low-income earners (<₦800K taxable/year): Pay zero PAYE — the biggest winners of the reform.
Middle-income workers (₦800K–₦3M taxable): Mixed impact — zero-rated first band helps, but the rate on the next band (15%) is similar to the old structure.
High-income earners (>₦50M taxable): Pay 25% at the top — slightly higher than the old 24% top rate.
Informal sector workers: The broader zero-rated band may incentivise formalisation as the tax cost of formal employment decreases at lower income levels.

FAQ

The 2026 PAYE bands reflect the revised personal income tax structure introduced as part of Nigeria's ongoing tax reform agenda. Always confirm the current effective bands with FIRS or your State Internal Revenue Service, as tax laws can be amended by the National Assembly.

The CRA is a tax relief deducted before computing PAYE. It equals 1% of gross income (minimum ₦200,000) plus 20% of gross income. This means the effective CRA is approximately 21% of gross salary for most workers, significantly reducing taxable income.

Yes. Under Nigerian personal income tax law, all employment income — basic salary, housing allowance, transport allowance, and other allowances — is included in gross income for PAYE purposes. The CRA and pension deductions then reduce this to arrive at taxable income.

Employee pension contributions under the Contributory Pension Scheme (CPS) are deductible for PAYE. The employee contributes 8% of (basic salary + housing allowance + transport allowance). This amount is subtracted from gross income before applying CRA and computing taxable income.