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PAYE Nigeria 2026: the ₦800,000 band, rent relief, and how salary tax is calculated
In short
The first ₦800,000 of taxable income is taxed at 0%. Rent relief is 20% of annual rent paid, capped at ₦500,000. The old Consolidated Relief Allowance (CRA) is gone. PAYE is not a flat slice of gross pay. Eligible deductions and reliefs come off first. Then the remaining figure — taxable income — moves through progressive bands. Reaching the 18% band does not put your whole salary at 18%. The ₦800,000 band and the ₦70,000 minimum-wage rule are different provisions. Use the calculator on this page for a monthly estimate. This is not a filing portal and not tax advice.
Understanding PAYE under the Nigeria Tax Act can feel like a percentage fight with your payslip. That is the wrong fight. PAYE runs in order: gross earnings, then allowable deductions and reliefs, then taxable income, then the bands.
This page explains that order. It is for salary earners checking a payslip, and for employers who have to get the file right. Current guidance can still move. Treat this as a reading of the 2026 framework, not a personal assessment.
Watch the walkthrough (about 15 minutes). Same order as this page: bands, rent relief, why gross pay is not taxable income.
How PAYE bands work in 2026
The common fear is the repricing myth: cross into a higher band and the whole salary is taxed at the new rate.
That is not how a progressive system works. Income fills bands in slices. The higher rate applies only to the amount that spills into that band. The income below it stays where it was.
2026 PAYE tax bands in Nigeria
These bands apply to annual taxable income, not automatically to gross salary.
Band 1 — first ₦800,000 — 0%
Band 2 — next ₦2,200,000 (₦800,001 to ₦3,000,000) — 15%
Band 3 — next ₦9,000,000 (₦3,000,001 to ₦12,000,000) — 18%
Band 4 — next ₦13,000,000 (₦12,000,001 to ₦25,000,000) — 21%
Band 5 — next ₦25,000,000 (₦25,000,001 to ₦50,000,000) — 23%
Band 6 — above ₦50,000,000 — 25%
The ₦800,000 line is a zero-rate band. It is not, by itself, a statement that every other tax obligation disappears.
Crossing 18% does not tax your whole salary
Take taxable income of ₦3,500,000 after allowable deductions.
That figure crosses ₦3 million, so the 18% band is in play. It does not mean 18% of ₦3,500,000 (₦630,000).
The income fills each band in order:
First ₦800,000 at 0% → ₦0. Still to allocate: ₦2,700,000
Next ₦2,200,000 at 15% → ₦330,000. Still to allocate: ₦500,000
Next ₦500,000 at 18% → ₦90,000
Annual PAYE: ₦420,000
Effective rate on that taxable income: 12.0%, not 18%.
What replaced CRA: rent relief
CRA under the old Personal Income Tax framework was a broad payroll allowance. The usual formula people remember is 20% of gross income plus ₦200,000. It rose with pay. It did not need a rent receipt.
Under the current framework, that blanket allowance is gone. In its place:
the ₦800,000 zero-rate band, which every taxpayer’s taxable income passes through first
a targeted rent relief for people who actually pay rent
Old CRA and new rent relief, side by side
Old CRA
Who: generally built into salaried payroll
How: a formula that rose with gross pay
Papers: usually none
Job: a general reduction in the taxable figure
New rent relief
Who: tenants who pay rent
How: 20% of annual rent paid, capped at ₦500,000
Papers: rent receipt, lease, or proof of payment — payroll will usually want this
Job: housing spend, not a universal allowance
Homeowners and anyone who pays no rent claim ₦0 rent relief. Their first personal relief in the schedule remains the ₦800,000 zero-rate band.
Rent relief in practice
₦1,000,000 annual rent → 20% = ₦200,000. Under the cap, relief is ₦200,000.
₦4,000,000 annual rent → 20% = ₦800,000. The cap bites. Relief is ₦500,000.
No rent paid → relief is ₦0.
Rent relief is not automatic. To see it on a payslip, the employee generally has to give HR or payroll something current guidance will accept.
How taxable income is calculated for PAYE
Headline salary is rarely the figure that enters the bands.
A typical sequence looks like this. The exact items depend on the person and on current rules.
Start with gross employment income (basic, housing, transport, and other taxable allowances).
Take off statutory pension. The employee rate in common use is 8% of basic, housing and transport — not always 8% of every naira in the package.
Take off National Housing Fund where it applies. The figure often used is 2.5% of basic.
Take off NHIS contributions where they apply.
Take off approved life insurance premiums and qualifying mortgage interest on an owner-occupied home, where current rules allow them.
Take off eligible rent relief (20% of annual rent paid, maximum ₦500,000).
What remains is taxable (chargeable) income.
Run that annual figure through the bands, then divide by 12 for the monthly PAYE line.
This is why a calculator that only multiplies gross pay by 15% or 18% is the wrong tool.
PAYE on ₦10 million taxable income
Here the ₦10 million is already taxable income — after pension, NHF, rent relief and the other eligible items. It is not gross pay.
First ₦800,000 at 0% → ₦0
Next ₦2,200,000 at 15% → ₦330,000
Remaining ₦7,000,000 at 18% → ₦1,260,000
Annual PAYE: ₦1,590,000
Monthly PAYE: ₦132,500
Effective rate on that taxable income: 15.9%
A flat 18% on ₦10 million would be ₦1,800,000. The bands are ₦210,000 lower in this example. That gap is the point of progressive rates, not a loophole.
Use the PAYE calculator (2026 rules)
Same salary, different PAYE
Two colleagues can both earn ₦10 million gross and still not owe the same tax. The useful question is how each file reached taxable income.
The figures below keep pension and NHF the same so the rent contrast is visible. The ₦650,000 line is an assumed combined deduction, not a claim that 8% always applies to the whole ₦10 million.
Employee A — tenant
Gross: ₦10,000,000
Pension and NHF (assumed combined): ₦650,000
Annual rent ₦2,500,000 → rent relief ₦500,000 (the cap)
Taxable income: ₦8,850,000
Annual PAYE: ₦1,383,000
Monthly PAYE: ₦115,250
Employee B — no rent claimed
Gross: ₦10,000,000
Pension and NHF (same assumption): ₦650,000
Rent relief: ₦0
Taxable income: ₦9,350,000
Annual PAYE: ₦1,473,000
Monthly PAYE: ₦122,750
Same headline salary. ₦7,500 a month apart. The difference is ₦500,000 of taxable income sitting in the 18% band.
Optimising what current guidance already treats as deductible is the practical work. Fighting the statute is not.
₦800,000 band vs ₦70,000 minimum wage
These two numbers travel together in PAYE talk. They are not substitutes.
₦800,000 is a band. Every taxable-income calculation walks through it at 0% first.
₦70,000 a month is the national minimum wage. Current published guidance treats employees at or below that wage as outside PAYE deductions. ₦70,000 a month is ₦840,000 a year. That is a different switch from the ₦800,000 band.
Do not use one figure to stand in for the other. Employers should follow current official guidance when the two rules sit on the same payroll.
PAYE duties for employers
For employers, SMEs and HR, PAYE is a withholding and remittance job, not a debate about bands.
Compute taxable income, not just gross.
Apply rent relief only where the papers support it.
Withhold the monthly amount and remit on the statutory timetable.
Keep the payroll register, the payslip and the remittance schedule able to tell the same story.
A mismatch among those three is what an audit reads. The defence is the record, not the argument.
Use the PAYE calculator (2026 rules)
Enter gross pay and rent on the calculator on this page for a monthly estimate after the main statutory items. TaxMateNG is independent software. It is not NRS, not a government portal, and not a substitute for the official file.
If you are keeping payroll or a personal ledger through the year, the same order applies: records first, then the bands.
What to take away
A higher band taxes only the slice that enters that band.
CRA is gone. The ₦800,000 zero-rate band and capped rent relief are what replaced that blanket allowance.
Gross pay is not taxable income. Pension, NHF and eligible rent relief change the starting point.
Two ₦10 million salaries can produce two PAYE figures.
₦800,000 and ₦70,000 are different rules.
The payslip is only as good as the file behind it.
Important note
Tax depends on the person, the nature of the income, residency, supporting documents and later administrative guidance. This page is general information. It is not professional tax advice and not an official computation. For a messy file, use a qualified professional and the relevant tax authority.
Sources for the framework discussed here include the Nigeria Tax Act 2025 (in force from 1 January 2026) and current published summaries of the personal income tax bands, rent relief and minimum-wage PAYE treatment. Check the latest official text before you rely on a number.
Primary References & Sources
Joint Revenue Board of Nigeria: Guidelines on the Taxation of Personal Income and Employee Reliefs under the Nigeria Tax Act.
Nigeria Revenue Service (NRS): Nigeria Tax Administration Act (NTAA) Guidance Notes on Employer Payroll Obligations.
PwC Nigeria Tax Reform Summaries: The Nigerian Tax Reform Acts: Changes to Personal Income Tax, Rent Relief, and Progressive Rates
PwC Worldwide Tax Summaries: Nigeria Individual Tax Developments & Personal Income Tax Schedule
KPMG Nigeria Fiscal Insights: Reforms of the Personal Income Tax Regime under the Nigeria Tax Act
TaxMateNG Official Guidance: Nigeria 2026 PAYE Tax Calculator & Statutory Deductions Framework
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