Calculate your PAYE / Personal Income Tax instantly under the Nigeria Tax Act 2025 (effective 1 January 2026). Free, accurate, and updated with the latest bands and reliefs.
✅ Your income is at or below the ₦800,000 tax-free threshold, so you pay no personal income tax under the Nigeria Tax Act 2025.
| Band | Rate | Amount Taxed | Tax |
|---|
This Nigeria Tax Calculator helps you estimate your Personal Income Tax (PAYE) under the Nigeria Tax Act 2025, effective 1 January 2026. It applies the new progressive tax bands, the ₦800,000 tax-free threshold, and the Rent Relief Allowance that replaced the old Consolidated Relief Allowance.
| Annual Income Band | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (₦800,001 – ₦3,000,000) | 15% |
| Next ₦9,000,000 (₦3,000,001 – ₦12,000,000) | 18% |
| Next ₦13,000,000 (₦12,000,001 – ₦25,000,000) | 21% |
| Next ₦25,000,000 (₦25,000,001 – ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
This tool is for general guidance only and does not constitute tax advice. Please consult a qualified tax professional or the Nigeria Revenue Service (NRS) for advice specific to your circumstances.
A Nigeria Tax Calculator is a simple online tool that helps you work out exactly how much Pay As You Earn tax you owe on your salary, instantly and without spreadsheets or manual arithmetic. Whether you are a salaried employee checking your monthly payslip, an HR officer running payroll for a growing team, or a freelancer trying to understand withholding tax on a contract payment, this tax calculator Nigeria employees rely on gives you an accurate figure in seconds. Under the new Nigeria Tax Act that took effect on 1 January 2026, the way personal income tax is worked out changed significantly, and a lot of people are still calculating their pay using outdated rules. This nigeria income tax calculator has been built around the current law, so the numbers you get back actually match what the Nigeria Revenue Service expects.
Using an online calculator instead of doing the sums by hand removes the guesswork from your monthly PAYE deductions and helps you avoid the common mistake of applying old tax bands to a new tax year. It also breaks your result down clearly, showing you the tax free portion, the amount charged in each band, your pension and rent relief, and the final figure that lands in your bank account. This is especially useful when you are budgeting a monthly income, negotiating a new salary offer, or simply confirming that your employer has deducted the correct amount from your pay.
On 1 January 2026, the Nigeria Tax Act came into force, replacing large parts of the old Personal Income Tax Act. If you have been wondering how is tax calculated in Nigeria this year compared to before, the short answer is that the entire structure has been rebuilt. The old system taxed nearly everyone from the very first Naira earned, using a Consolidated Relief Allowance that many people found confusing. The new law scraps that approach entirely and introduces a much larger tax free threshold along with a cleaner six band structure.
Anyone earning ₦800,000 or less in a year now pays absolutely nothing in income tax, a sharp jump from the old ₦300,000 threshold. Above that point, your income is taxed progressively, meaning each band of your earnings is taxed at its own rate rather than your entire income being pushed into one bracket. This is the part people misunderstand the most when they try to figure out how to calculate income tax in Nigeria manually, so it helps to see the actual bands laid out.
| Annual Chargeable Income | Tax Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (₦800,001 to ₦3,000,000) | 15% |
| Next ₦9,000,000 (₦3,000,001 to ₦12,000,000) | 18% |
| Next ₦13,000,000 (₦12,000,001 to ₦25,000,000) | 21% |
| Next ₦25,000,000 (₦25,000,001 to ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
Because these rates are marginal, you never pay the higher rate on your entire salary, only on the portion of income that falls inside that particular band. This is exactly what a monthly PAYE tax calculator Nigeria workers use is built to handle automatically, layering each band correctly so you are never overcharged.
If you want to understand how to calculate tax on salary in Nigeria step by step rather than just plugging numbers into a tool, the process follows a fixed sequence. Getting the order right matters, because skipping a deduction or applying it at the wrong stage will throw off your final figure.
Numbers make this far easier to follow than formulas alone, so here is a full example showing how is personal income tax calculated in Nigeria for someone earning ₦2,400,000 a year, or ₦200,000 a month, who pays ₦600,000 in annual rent.
| Step | Calculation | Amount |
|---|---|---|
| Gross annual income | ₦200,000 × 12 | ₦2,400,000 |
| Pension deduction | 8% of gross | ₦192,000 |
| Rent relief | 20% of ₦600,000 (under cap) | ₦120,000 |
| Chargeable income | 2,400,000 − 192,000 − 120,000 | ₦2,088,000 |
| Tax at 0% (first ₦800,000) | ₦800,000 × 0% | ₦0 |
| Tax at 15% (remaining ₦1,288,000) | ₦1,288,000 × 15% | ₦193,200 |
| Total annual PAYE | ₦193,200 | |
| Monthly PAYE | 193,200 ÷ 12 | ₦16,100 |
Compare that to the old Personal Income Tax Act structure, where this same earner would have paid tax from the very first Naira after a much smaller Consolidated Relief Allowance, often ending up with an annual liability well above ₦250,000. The gap explains why so many workers noticed a difference in their pay after January 2026.
For anyone running payroll, knowing how to calculate PAYE tax in Nigeria correctly every single month is a compliance requirement, not just a nice to have. HR teams need to confirm the pensionable base first, since pension is calculated only on Basic, Housing and Transport, not on bonuses, commissions or one off allowances unless the employment contract says otherwise. Once the pensionable base is confirmed, the same six band structure applies uniformly across every employee, regardless of their industry or job title.
It also matters that every taxable person now needs a valid Tax Identification Number linked to their National Identification Number under the Nigeria Tax Administration Act. Employees without a TIN can face restrictions on payroll processing, so this is worth checking before you run your first payroll cycle of the year. A good nigeria tax calculator 2026 tool will let you enter these figures individually per employee and export the results, which saves HR departments hours of manual spreadsheet work every payday.
Withholding tax works differently from PAYE, and a lot of freelancers, landlords, and small business owners get the two confused. Understanding how to calculate withholding tax in Nigeria starts with recognising that WHT is not a separate tax on top of what you already owe, it is an advance deduction taken at the point of payment and later credited against your final tax bill. The person or company making the payment deducts a percentage before the money reaches you, then remits it to the tax authority within 21 days and issues you a credit note.
| Payment Type | Rate (Individuals) | Rate (Companies) |
|---|---|---|
| Rent | 10% | 10% |
| Dividends and interest | 10% | 10% |
| Royalties | 5% | 10% |
| Professional and consultancy fees | 5% | 5% |
| Contracts, supply and construction | 2% | 2% |
So how is withholding tax calculated in Nigeria in practice? Take a consultant who invoices a client ₦1,000,000 for a professional service. The client applies the 5% professional fees rate, withholds ₦50,000, and pays the consultant ₦950,000. The consultant then receives a WHT credit note for ₦50,000, which they can use to offset their eventual personal income tax liability when they file. Small businesses with an annual turnover under ₦25 million are generally exempt from deducting WHT on individual transactions up to ₦2,000,000, provided the supplier has a valid TIN, which is a relief many small vendors were not aware of until recently.
Manually working through pension deductions, rent relief caps, six separate tax bands, and rounding at every stage leaves a lot of room for small errors that add up over a year. An online nigeria tax calculator 2026 tool applies the current law automatically, so you do not need to keep track of every Finance Act update or double check whether you are using the ₦800,000 threshold or the outdated ₦300,000 figure. It is particularly useful for people comparing job offers, since you can instantly see your net monthly income for different gross salaries side by side instead of doing four or five manual calculations.
It is also a practical tool for anyone preparing documents for a loan application, a visa process, or simply confirming their own payslip against what their employer has deducted. Because the calculator applies pension, rent relief and NHF in the correct order before touching the tax bands, the figure you get back matches what a qualified accountant would produce, just delivered instantly rather than after a back and forth email.
How to calculate tax in Nigeria for a fixed monthly salary?
Multiply your monthly gross salary by 12 to get an annual figure, subtract pension at 8% of Basic, Housing and Transport, subtract rent relief if applicable, then apply the six PAYE bands to what remains. Divide the resulting annual tax by 12 for your monthly deduction.
How to calculate personal income tax in Nigeria if I have no rent relief to claim?
Simply skip that deduction step. Your chargeable income becomes gross annual income minus pension and NHF only, and the same progressive bands are then applied as normal.
How to calculate paye tax in Nigeria for a first job with no pension yet enrolled?
If pension has not started, your chargeable income is closer to your full gross income, which usually means a slightly higher tax figure until enrollment begins, since pension contributions are one of the main deductions before the bands apply.
How is tax calculated in Nigeria for someone earning exactly ₦800,000 a year?
They pay zero income tax. The entire ₦800,000 falls within the tax free band introduced by the Nigeria Tax Act, so no PAYE is deducted at that income level.
How is withholding tax calculated in Nigeria on rental income?
A tenant paying rent to a landlord withholds 10% of the gross rent amount before payment, remits it to the tax authority, and issues the landlord a credit note for that 10%, which the landlord later offsets against their own tax liability.
How is paye tax calculated in Nigeria if my income includes bonuses?
Regular bonuses are typically added to your gross taxable income for the year and taxed through the same bands, though they are usually excluded from the pension calculation unless your contract states otherwise.
How is personal income tax calculated in Nigeria for a self employed freelancer?
Freelancers total their annual income from all clients, deduct allowable business expenses and reliefs, and apply the same six band structure to the resulting chargeable income, filing directly rather than through an employer's payroll.
Handy tools to help you plan and calculate with confidence