Tax
PAYE in 2026: what the Nigeria Tax Act changed for your salary
The first ₦800,000 a year is now tax free, the bands are new and rent relief replaces the old allowance. Here is what it means for take-home pay.
Floray Professionals12 October 20262 min read
From 1 January 2026, salaries in Nigeria are taxed under the Nigeria Tax Act 2025. For most employees the change is good news, but the way the tax is worked out is different, so it is worth understanding.
The new bands
Tax is charged in slices. Each slice of your yearly chargeable income has its own rate:
| Yearly chargeable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2.2 million (to ₦3m) | 15% |
| Next ₦9 million (to ₦12m) | 18% |
| Next ₦13 million (to ₦25m) | 21% |
| Next ₦25 million (to ₦50m) | 23% |
| Above ₦50 million | 25% |
A higher rate only applies to the slice above each threshold. Moving into a higher band never makes your whole salary more expensive.
What you can deduct
Before the bands are applied, you deduct:
- your pension contribution (usually 8% of pay),
- National Housing Fund and health insurance contributions,
- life insurance premiums and mortgage interest on your home,
- rent relief: 20% of the rent you pay, up to ₦500,000 a year.
The old consolidated relief allowance is gone. Rent relief takes its place for people who rent, so keep your tenancy agreement and receipts.
Minimum wage earners pay nothing
If you earn the national minimum wage or less (₦70,000 a month, ₦840,000 a year), no PAYE is due at all.
A quick example
On ₦400,000 a month with an 8% pension, yearly pay is ₦4.8m and pension is ₦384,000. Chargeable income is about ₦4.4m. Tax is 0% on the first ₦800,000, 15% on the next ₦2.2m and 18% on the remaining ₦1.4m or so: roughly ₦585,000 a year, or about ₦48,700 a month.
Check your own figure
Our PAYE calculator works this out for any salary and compares it with the old law. If you run payroll for a team and want it checked, talk to our tax team.
This article is general information, not advice for your situation.
