How Salary Deductions Work in Nigeria (2026 Guide) (2026)

By Bilal Butt, Founder of CountryPaycheck · Last verified: 24 October 2026

1 January 2026 was the biggest reset of Nigerian payroll tax in decades. The Nigeria Tax Act 2025 replaced the old bands, killed the Consolidated Relief Allowance, and introduced rent relief. Here’s the new system, end to end.

The new bands (from 1 January 2026)

Annual chargeable income	Rate
First ₦800,000	0%
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%

Gone: the old 7/11/15/19/21/24% bands and the CRA (₦200k + 1%/20% of gross). One widely-shared article shows an older draft table (18% on ₦3–10m) — the gazetted table above is the law.

What reduces chargeable income

Pension: 8% employee of Basic+Housing+Transport (employer 10%). NHF: 2.5% of basic — voluntary for private-sector staff in practice. NHIS/NHIA: typically 5% employee of basic where deducted. Rent relief (new): 20% of actual annual rent paid, capped at ₦500,000 — tenants only. Life-insurance premiums also qualify.

Minimum-wage exemption

Gross of ₦840,000/year (₦70,000/month) or less is fully exempt from PAYE — a deliberate feature of the new Act, not a loophole. (Minimum wage confirmed at ₦70,000/month through the review due June 2027.)

Employer-side costs

Pension 10% of (B+H+T), ITF 1% of payroll, NSITF 1% of payroll, NHIA 10% of basic (private sector), group life cover — all employer-paid, none touching your net.

PAYE remittance and records

Employers deduct PAYE each payroll and remit it to the relevant State Internal Revenue Service by the 10th of the following month. Keep your rent receipts, pension statements and — if you claim it — your NHF passbook: the new Act’s rent relief and pension deductibility are only as good as your paperwork. Non-residents are taxed on Nigeria-source income only; residents on worldwide income.

Worked examples

Example 1 — ₦500,000/month (basic ₩250k, B+H+T ₩400k, rent ₦2.5m): pension ₩32,000 + NHF ₩6,250 deductible monthly; rent relief ₦500,000 → chargeable ₦5,041,000 → tax ₩697,380/year → net ₦403,635/month.

Example 2 — ₦200,000/month: chargeable ₦2,246,400 → tax ₩216,960/year → net ₦169,120/month.

Common mistakes

1. Draft-table bands. Verify any 2026 calculator against the gazetted bands — the draft 18%-on-₦3–10m table still circulates.
2. Rent relief without receipts. It’s 20% of rent paid — keep receipts; employer-provided housing kills it.
3. NHF treated as mandatory. Enforcement is inconsistent and private-sector staff can opt out — check your slip before assuming 2.5%.

Try it: Nigeria salary calculator →