How is income tax calculated in Nigeria?
From 1 January 2026 the Nigeria Tax Act applies. The first NGN 800,000 of annual taxable income is taxed at 0%, the next NGN 2,200,000 at 15%, the next NGN 9,000,000 at 18%, the next NGN 13,000,000 at 21%, the next NGN 25,000,000 at 23%, and everything above NGN 50,000,000 at 25%.
Employees contribute at least 8% of monthly emolument to the contributory pension scheme, and that contribution is deductible before tax. The old consolidated relief allowance is gone; a rent relief replaced it.
What is the income tax rate in Nigeria?
| Taxable income | Rate |
|---|---|
| NGN 0 – NGN 800,000 | 0% |
| NGN 800,000 – NGN 3,000,000 | 15% |
| NGN 3,000,000 – NGN 12,000,000 | 18% |
| NGN 12,000,000 – NGN 25,000,000 | 21% |
| NGN 25,000,000 – NGN 50,000,000 | 23% |
| Over NGN 50,000,000 | 25% |
What mandatory salary deductions apply?
- Pension (employee, contributory pension scheme): 8% of pay.
Gross salary and take-home salary
Gross salary is what your contract says before anything is taken off. Take-home salary is what reaches your bank account after income tax and the compulsory employee contributions. Employer contributions are paid on top of your salary and are not taken from it.
Example: NGN 4,000,000.00 a month
An employee earning 4,000,000 a month, about US$3,000.
| Item | Monthly | Annual |
|---|---|---|
| Gross salary | NGN 4,000,000.00 | NGN 48,000,000.00 |
| Income tax | NGN 757,233.33 | NGN 9,086,800.00 |
| Compulsory contributions | NGN 320,000.00 | NGN 3,840,000.00 |
| Take-home pay | NGN 2,922,766.67 | NGN 35,073,200.00 |
Effective income tax rate 18.9%; all deductions 26.9%.
Frequently asked questions
Is there still a consolidated relief allowance?
No. The Nigeria Tax Act removed it and introduced a rent relief of 20% of annual rent paid, up to NGN 500,000.
Is the National Housing Fund deduction compulsory?
Only for public-sector employees. Private-sector employees may contribute the 2.5% voluntarily.
Who pays no PAYE at all?
Employees earning not more than the national minimum wage are not liable to tax or PAYE deductions.
Official sources
- PwC Worldwide Tax Summaries (reviewed 29 May 2026): Nigeria – Individual – Taxes on personal income. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 29 May 2026): Nigeria – Individual – Other taxes. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 29 May 2026): Nigeria – Individual – Deductions. Read 5 November 2026.
- PwC Worldwide Tax Summaries (reviewed 29 May 2026): Nigeria – Individual – Significant developments. Read 5 November 2026.
Last reviewed 5 November 2026. An estimate for planning, not tax advice; your employer’s payroll and the tax authority decide what is actually withheld.
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