Nigeria PAYE Calculator (Nigeria Tax Act Bands)

About the Nigeria PAYE Calculator (Nigeria Tax Act Bands)

Work out your PAYE under the Nigeria Tax Act. Enter your gross pay for a month or a year, what you pay into your pension, the National Housing Fund (NHF) and health insurance (NHIS), and the rent you pay: the calculator deducts what section 30 of the Act allows — including rent relief of 20% of your rent, up to ₦500,000 — taxes the rest by the Act's six bands, from 0% on the first ₦800,000 to 25% above ₦50,000,000, and spreads the year's tax over twelve months.

The result shows your chargeable income, the tax in each band, your effective and top rates, and what the same pay cost under the old Personal Income Tax Act rules with the consolidated relief allowance (CRA), so you can see what the new law changes for you. Nothing you type leaves your browser.

How PAYE is worked out

Your chargeable income is your total income less eligible deductions (Nigeria Tax Act, section 30). For an employee the eligible deductions include your contributions to the National Housing Fund, the National Health Insurance Scheme and your pension under the Pension Reform Act, interest on a loan for developing an owner-occupied residential house, life insurance or deferred annuity premiums paid in the year before, and rent relief.

The Fourth Schedule then taxes chargeable income in bands (section 58):

• the first ₦800,000 at 0%;
• the next ₦2,200,000 at 15%;
• the next ₦9,000,000 at 18%;
• the next ₦13,000,000 at 21%;
• the next ₦25,000,000 at 23%;
• above ₦50,000,000 at 25%.

PAYE a month here is the tax for the year divided by 12. A year of assessment is the calendar year, January to December.

Rent relief

You can deduct 20% of the rent you pay in the year, up to ₦500,000, so rent of ₦2,500,000 or more gets the full ₦500,000. The Act allows it when you accurately declare the rent you actually pay and the other information the tax authority asks for. Every deduction must be claimed in writing in the form the tax authority prescribes, and it can ask for documentary evidence such as a tenancy agreement and receipts (sections 30 to 32).

Minimum-wage earners

Income from an employment that pays the national minimum wage or less is exempt (section 162(1)(t)), and the Fourth Schedule's rates apply to everyone else (section 58). The President approved ₦70,000 as the national minimum wage (State House), and federal pay scales were revised after the National Minimum Wage (Amendment) Act, 2024 was enacted (National Salaries, Incomes and Wages Commission). The calculator uses ₦70,000 a month and lets you change it under More reliefs.

The Tax Reforms Committee's summary describes annual gross income of up to ₦1,200,000 as exempt, "translating to about ₦800,000 taxable income"; the calculator always works from the Act's bands and your own deductions, so the line falls wherever your deductions put it.

Compared with the old rules

The Nigeria Tax Act repealed the Personal Income Tax Act (section 195). Under the old Act, pay was first reduced by its tax-exempt items — pension, NHF and NHIS contributions, life assurance premiums and gratuities — and by interest on loans for developing an owner-occupied residential house, which was deducted in working out income (Personal Income Tax Act, section 20(1)(b)). A consolidated relief allowance (CRA) of ₦200,000 or 1% of gross income, whichever is higher, plus 20% of gross income came off next; the rest was taxed at 7% to 24%, with a minimum tax of 1% of gross income (Personal Income Tax (Amendment) Act, 2011). The Finance Act, 2020 defined gross income for the CRA as income from all sources less non-taxable income, those tax-exempt items and allowable business expenses, and exempted minimum-wage earners, with no minimum tax for them.

The comparison applies those rules to the same pay, the same contributions and the same interest on a loan for your own home. Rent relief is new in the Nigeria Tax Act, so the old-rules figure has none.

Lump sums when you leave a job

Compensation for loss of office or employment of up to ₦50,000,000 is not taxed; only the part above it is a chargeable gain, and whoever pays the compensation deducts the tax due when paying it (section 50). Pensions, gratuities and other retirement benefits under the Pension Reform Act are exempt (section 162(1)(i)). Neither belongs in the gross pay you enter here.

Limitations

• For a Nigerian resident’s employment income for a whole year of assessment. Business profits, investment income, a second job and capital gains are not included.
• PAYE is spread evenly over the year. A payroll that taxes a bonus or a pay rise in the month it is paid may deduct different amounts in some months; the tax for the year depends on the year’s total income.
• Living accommodation provided by your employer counts as extra pay at its annual rental value, up to 20% of your annual gross income from the employment (section 14(6)): add it to your gross pay yourself.
• The national minimum wage is the figure in the field; enter the new amount if it changes.
• An estimate from the Acts’ rules, not tax advice: your employer’s payroll and the tax authority’s assessment decide what you pay.

Privacy

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