Tax on a bonus stacked on your income.
Net bonus
—
Tax on bonus
—
Marginal band
—
Why your bonus is taxed harder than your salary
A bonus does not get its own tax rate in Nigeria. It is added to the rest of your chargeable income for the year and taxed on the same progressive scale. The catch is where it lands. Your salary fills the lower bands first; the bonus sits on top of everything below it, in your highest band, and sometimes in a band above where your salary alone would reach. That is why the effective rate on a bonus often feels steeper than the rate on your monthly pay, even though no special bonus tax exists.
This tool measures that bite cleanly. It taxes your regular chargeable income, then taxes the regular income plus the bonus, and reports the difference as the tax on the bonus. It also shows the marginal band, meaning the rate that applies to the top naira of regular income plus bonus, so you can see which band your bonus is being taxed in.
When a bonus crosses a band edge
The interesting case is a bonus that straddles a band boundary. Suppose your regular chargeable income is NGN 11,500,000 and you receive a bonus of NGN 1,000,000. The boundary the calculator applies between the 18 percent band and the 21 percent band sits at NGN 12,000,000. The first NGN 500,000 of your bonus fills the gap up to NGN 12,000,000 and is taxed at 18 percent, giving NGN 90,000. The remaining NGN 500,000 spills into the next band and is taxed at 21 percent, giving NGN 105,000. The total tax on the bonus is NGN 195,000, so you keep NGN 805,000. Notice the effect: part of the same bonus is taxed at two different rates. These are the rates this calculator applies; the principle of a split across bands is the durable part, while the exact boundary should be confirmed with the FIRS or your state internal revenue service.
| Slice of the bonus | Rate | Tax |
|---|---|---|
| First NGN 500,000 (up to NGN 12m) | 18% | NGN 90,000 |
| Next NGN 500,000 (above NGN 12m) | 21% | NGN 105,000 |
| Tax on the NGN 1,000,000 bonus | NGN 195,000 | |
| Net bonus kept | NGN 805,000 |
Timing, and a way to soften the hit
Because the bonus stacks on the top of your income, anything that lowers your chargeable income lowers the tax on the bonus too. Voluntary pension contributions, the National Housing Fund, life-insurance premiums, and rent relief all pull your taxable base down, which can keep more of the bonus inside a lower band. If a bonus is discretionary in timing, smoothing it across a year boundary can also matter when your income is unusually high in one year. None of this is tax avoidance; it is using the reliefs the law already provides. Run both scenarios in this tool to see the difference before you decide.
Will tax really take a fifth of my bonus?
It can, if the bonus sits in the upper bands. In the example above the effective rate on the bonus was 19.5 percent, and for higher earners whose bonus lands in the 23 or 25 percent band the share is larger. The exact figure depends on your total income for the year, which is why a flat rule of thumb misleads. Enter your real regular income and bonus here for the precise number.
Is a signing bonus taxed the same way?
Yes. A signing bonus, a retention bonus, and a year-end performance bonus are all employment income and stack on your other earnings in the same way. The label does not change the tax. If a signing bonus arrives early in the year before much salary has been paid, it may temporarily push your withholding around, but the annual position settles on the bands. Confirm the current bands with the FIRS or your state internal revenue service, since the 2025 reform is still moving several thresholds.