Annual PAYE under the 2026 six-band scale, after reliefs.
Income tax due
—
Chargeable income
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Effective rate
—
Net income
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Worked example
Take a chargeable income of N6,000,000 with no further reliefs claimed. The first N800,000 is tax-free, so it adds nothing. The next N2,200,000 (from N800,000 to N3,000,000) sits in the 15% band and produces N330,000. The remaining N3,000,000 (from N3,000,000 to N6,000,000) sits in the 18% band and produces N540,000. Total income tax is N870,000. Against gross income of N6,000,000 that is an effective rate of 14.5%, which is well below the 18% top band the income reaches because the lower slices are taxed more lightly. Net income after tax is N5,130,000.
Band
Tax (NGN)
First N800,000 at 0%
0
N800,000 to N3,000,000 at 15%
330,000
N3,000,000 to N6,000,000 at 18%
540,000
Total income tax
870,000
Effective rate
14.5%
How it is calculated
Personal income tax under the Nigeria Tax Act 2025 runs on six progressive bands applied to chargeable income, which is gross income less allowable reliefs such as pension, NHF, NHIS, and rent relief. The first N800,000 of chargeable income bears no tax at all. The next slices are taxed at 15% up to N3,000,000, then 18% up to N12,000,000, 21% up to N25,000,000, 23% up to N50,000,000, and 25% above that. Because each rate applies only to the slice of income inside its band, the effective rate stays below the top marginal rate. A separate exemption removes PAYE entirely for anyone earning the national minimum wage of N840,000 a year or less.
Frequently asked questions
How much income tax do I pay in Nigeria in 2026?
Under the Nigeria Tax Act 2025, the first N800,000 of chargeable income is tax-free. The next slices are taxed at 15%, 18%, 21%, 23%, and 25%. If your total annual employment income is at or below the national minimum wage of N840,000, you pay no PAYE at all. Chargeable income is your gross income less reliefs such as pension, NHF, and rent relief.
What is the difference between gross income and chargeable income in Nigeria?
Gross income is your total earnings before any deductions. Chargeable income is gross income less allowable reliefs, including your 8% employee pension contribution, National Housing Fund deductions, NHIS contributions, and rent relief where applicable. Tax is computed on chargeable income, so claiming all allowable reliefs reduces your taxable base and lowers your bill before the bands are applied.
How does the 2026 Nigeria tax scale compare to the old one?
The previous scale had seven bands starting at 7% and rising to 24%, applied after a consolidated relief allowance. The Nigeria Tax Act 2025, effective from 2026, replaces this with a six-band scale where the first NGN 800,000 is taxed at zero percent, then 15%, 18%, 21%, 23%, and 25%. Minimum-wage earners are fully exempt. For most middle-income earners the new structure reduces the effective rate compared to the old framework, but the actual saving depends on which reliefs you were previously claiming.
Who collects PAYE in Nigeria and when is it due?
PAYE is deducted from salary by your employer each month and remitted to the state internal revenue service for the state where you work, for example the Lagos State Internal Revenue Service for Lagos-based employees. The state IRS, not the Federal Inland Revenue Service, administers employment income tax, which is why rates and enforcement can vary between states even though the federal bands set the floor. Your employer is legally required to remit within 10 days of the end of each month.