Nigeria personal income tax bands 2026: how much PAYE you actually pay, with worked examples

The Nigeria Tax Act, 2025 was signed into law on 26 June 2025 and took effect on 1 January 2026. For employees, the headline change is a new set of personal income tax bands that start with a tax-free slice. This explainer sets out the bands, the deductions that shrink your taxable pay and two worked examples. It is general information from published sources, not tax advice, and the figures are as reported on 9 November 2026.

What are the personal income tax bands in Nigeria for 2026?

Both BusinessDay and a legal analysis published on Legal 500 list the same six bands for annual taxable income:

• First ₦800,000: 0%
• Next ₦2,200,000 (up to ₦3,000,000): 15%
• Next ₦9,000,000 (up to ₦12,000,000): 18%
• Next ₦13,000,000 (up to ₦25,000,000): 21%
• Next ₦25,000,000 (up to ₦50,000,000): 23%
• Above ₦50,000,000: 25%

The key point, which both sources stress, is that tax is applied gradually. A rate only touches the portion of income inside its band. Earning into the 18% band does not mean all your income is taxed at 18%.

What reduces my taxable income?

BusinessDay lists these deductions before the bands are applied: the employee's 8% pension contribution plus approved additional voluntary contributions, the National Housing Fund (NHF) contribution of 2.5% of basic salary, National Health Insurance Scheme (NHIS) contributions, interest on a loan for an owner-occupied home, and life insurance or deferred annuity premiums paid in the year before assessment, with proof of payment.

There is also rent relief. Legal 500 says the deduction is 20% of the annual rent you paid, capped at ₦500,000, whichever is lower, and the rent must be declared accurately. On ₦3 million of annual rent, 20% would be ₦600,000, but the deduction stops at ₦500,000. BusinessDay adds that you need a tenancy agreement or payment receipts.

Who pays nothing?

According to both sources, employment income of people earning the national minimum wage or less is exempt. BusinessDay's low-income example shows a worker on ₦70,000 a month: after the 8% pension deduction, annual taxable income is ₦772,800, below the ₦800,000 threshold, so PAYE is nil.

How is PAYE worked out on a ₦300,000 monthly salary?

BusinessDay's worked example uses a gross salary of ₦300,000 a month, or ₦3.6 million a year, with ₦600,000 of annual rent:

• Pension at 8%: ₦288,000
• NHF at 2.5%: ₦90,000
• Rent relief (20% of ₦600,000): ₦120,000
• Total deductions: ₦498,000, leaving chargeable income of ₦3,102,000
• Tax: ₦0 on the first ₦800,000, ₦330,000 on the next ₦2.2 million, and ₦18,360 on the remaining ₦102,000 at 18%
• Annual PAYE ₦348,360, or about ₦29,030 a month

BusinessDay applied the NHF rate to gross pay in this example even though its own rule refers to basic salary, so your real deduction may differ if your basic pay is lower than your gross pay.

What about a ₦5 million chargeable income?

Using the same bands, we worked this one out ourselves for illustration. On ₦5 million of chargeable income, the first ₦800,000 is free, the next ₦2.2 million at 15% is ₦330,000, and the remaining ₦2 million at 18% is ₦360,000. The total is ₦690,000 a year. This is our arithmetic on the published bands, not a figure from a tax authority, so use it only as a guide.

Which other incomes are exempt?

Legal 500 lists examples beyond the minimum-wage exemption. They include pension fund income and certain pensions and gratuities, death gratuities, compensation for injury, armed forces wages and salaries, and agricultural business income for the first five years. Export profits are also exempt if the proceeds are returned through official channels, excluding petroleum operations. On gains, it lists the sale of a main home with up to one acre of surrounding land, once in a lifetime, and the disposal of up to two private vehicles a year. Each exemption has conditions, so read the detail before you rely on one, and ask your employer or a qualified adviser how it applies to your own pay slip and circumstances.

What should you do next?

Check your payslip against the deductions above, keep your rent receipts and confirm your numbers with your employer's payroll team or a qualified tax adviser. If you do not yet have a Tax ID, see our guide on how to get your Nigeria Tax ID with your NIN.