Nigeria PAYE Calculator 2026 — Calculate Personal Income Tax Under the New NTA Rules

If you earn income from employment in Nigeria, your PAYE calculation changed significantly from January 2026.

The Nigeria Tax Act (NTA) 2025 replaced the previous Personal Income Tax framework with a new progressive structure. The new system introduced a ₦800,000 zero-rate band, revised the income tax bands, removed the former Consolidated Relief Allowance (CRA), and introduced a capped rent relief for eligible taxpayers.

This page explains how PAYE is calculated under the 2026 rules and provides a simple reference for employees, employers, payroll administrators, and anyone checking a PAYE calculation.

What Is PAYE?

PAYE (Pay As You Earn) is the system through which personal income tax on employment income is calculated and deducted from an employee's earnings.

The important distinction is that PAYE is not simply a flat percentage of salary.

Under the 2026 rules, taxable income is determined first. The resulting taxable income is then subjected to the progressive Personal Income Tax bands.

That means two employees with different taxable incomes can face different effective tax rates.

These are progressive bands. Reaching a higher band does not mean that your entire income is suddenly taxed at that higher rate. Only the portion falling within each band is taxed at its corresponding rate.

For example, someone with ₦10 million of taxable income does not pay 18% on the entire ₦10 million.

The first ₦800,000 falls into the 0% band, the next ₦2.2 million is taxed at 15%, and only the portion within the next band is taxed at 18%.

The ₦800,000 Zero-Rate Band

One of the most visible changes under the NTA 2025 is the new ₦800,000 zero-rate band.

The first ₦800,000 of taxable income is taxed at 0%.

This replaced the much lower starting bands under the previous Personal Income Tax framework.

The important point is that this is a tax band, not necessarily a statement that every person earning ₦800,000 or less has no other tax obligations.

PAYE calculations can depend on the nature of income, deductions, employment circumstances, and other provisions of the law.

What Happened to Consolidated Relief Allowance?

The former Consolidated Relief Allowance (CRA) has been removed under the new framework.

It has been replaced, in part, by a specific rent relief.

Eligible taxpayers can claim relief equal to:

20% of annual rent paid, subject to a maximum of ₦500,000.

For example:

• Annual rent = ₦1,000,000

• 20% of rent = ₦200,000

• Available rent relief = ₦200,000

If annual rent were ₦4,000,000:

• 20% of rent = ₦800,000

• Maximum relief = ₦500,000

• Available rent relief = ₦500,000

The relief therefore cannot exceed ₦500,000.

Supporting information and documentation may be required when claiming the relief.

Other Deductions and Reliefs

The PAYE calculation is not based solely on salary.

Depending on the taxpayer's circumstances, certain deductions may be relevant when determining taxable income.

These include items such as:

• Pension contributions

• National Housing Fund (NHF) contributions

• National Health Insurance Scheme (NHIS) contributions

• Life insurance premiums

• Qualifying mortgage interest on an owner-occupied property

• Eligible rent relief

The availability and treatment of deductions can depend on the applicable rules and supporting documentation.

This is one reason a PAYE calculator should not simply multiply gross salary by a percentage.

How PAYE Is Calculated

A simplified PAYE calculation can be understood as a sequence:

1. Determine employment income

Start with the employee's relevant employment income.

This can include salary, allowances, bonuses, and other taxable employment benefits.

Not every payment or reimbursement is necessarily treated in exactly the same way. For example, certain properly supported reimbursements can receive different treatment.

2. Identify allowable deductions and reliefs

Applicable pension and other qualifying deductions are considered.

Eligible rent relief and other permitted deductions may also reduce the amount subject to tax.

3. Determine taxable income

After applying the relevant deductions and reliefs, the resulting amount becomes the taxable income used for the progressive tax calculation.

4. Apply the progressive tax bands

The taxable income is divided across the applicable bands.

Each portion is taxed at its corresponding rate.

5. Determine the annual tax liability

The amounts calculated across the different bands are added together to determine the individual's annual Personal Income Tax liability.

The annual liability can then be used to determine the corresponding PAYE deductions.

A Simple PAYE Example

Consider an employee with ₦10,000,000 of taxable income for the year.

The calculation would work progressively:

• First ₦800,000 → 0%

• Next ₦2,200,000 → 15%

• Remaining ₦7,000,000 → 18%

The resulting annual tax is:

• ₦800,000 × 0% = ₦0

• ₦2,200,000 × 15% = ₦330,000

• ₦7,000,000 × 18% = ₦1,260,000

Total annual PAYE/PIT = ₦1,590,000

This illustrates why the marginal rate should not be confused with the employee's effective tax rate.

What About Minimum-Wage Earners?

Current published tax guidance notes that employees earning no more than the national minimum wage of ₦70,000 are not liable for PAYE deductions under the new regime.

The ₦800,000 annual zero-rate band is a separate part of the progressive tax structure.

Because payroll treatment can depend on the employee's circumstances and applicable administrative guidance, employers should use the current rules and official guidance when processing payroll.

PAYE Is More Than a Salary Calculation

For employers, PAYE is only one part of maintaining accurate financial records.

A reliable payroll system also needs to keep track of:

• Employee earnings

• Allowances

• Deductions

• Pension contributions

• Taxable benefits

• PAYE liabilities

• Payroll records

• Supporting documentation

Good records make it easier to reconcile payroll figures and explain how the final tax figures were produced.

This becomes particularly important when payroll information needs to be reviewed later.

Nigeria PAYE Calculator 2026

TaxMateNG includes personal income tax calculations based on the applicable 2026 framework.

The goal is straightforward: take the relevant income and deduction information and apply the published tax structure consistently.

TaxMateNG is not a government agency, does not have an affiliation with the Nigerian government, and is not a tax filing portal.

It is an independent software tool designed to help users structure financial information and calculate tax estimates based on published rules.

Personal Income Tax calculations are available free for personal users.

For users who need additional reporting functionality, TaxMateNG's paid features are primarily associated with corporate reporting and related desktop workflows.

Important Note

Tax rules can depend on individual circumstances, the nature of income, applicable deductions, residency, and subsequent administrative guidance.

This page is provided for general information and should not be treated as professional tax advice.

For complex situations, taxpayers should consult a qualified tax professional or verify the applicable requirements with the relevant tax authority.

Sources

For this page, the principal reference points include the Nigeria Tax Act 2025 and current professional tax summaries from PwC, KPMG and EY. The 2026 PAYE bands and rent-relief framework are consistently reflected in current professional guidance.

Official commencement: The Nigerian government confirmed that the new tax laws scheduled for January 1, 2026 would commence as planned.