Tax on your next naira and a raise.
Marginal tax rate
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Tax on extra
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You keep
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The tax on your next naira, not your average
People mix up two very different numbers. Your average tax rate is the total tax you pay divided by your whole income. Your marginal rate is the tax on the next naira you earn, and it is the one that matters when you are weighing a raise, a bonus, a side gig, or a decision to work overtime. Because Nigeria taxes income in progressive bands, your first naira and your latest naira are taxed at different rates, so the marginal rate is always at least as high as the average. This calculator isolates that marginal rate and shows you exactly how much of an extra amount you keep.
Personal income tax in Nigeria is administered by your state internal revenue service, for example the Lagos State Internal Revenue Service for residents of Lagos, under the federal personal income tax framework. The tool works for any salaried earner, freelancer, or business owner trying to understand what an increase in income is really worth after tax, on the chargeable income figure rather than gross pay.
How it finds the rate without guesswork
Rather than assume which band you sit in, this calculator measures the marginal rate empirically. It computes the tax on your current chargeable income, then computes the tax on that income plus the extra you enter, and the difference is the tax caused by the extra. Divide that by the extra and you have your true marginal rate. This method has a real advantage: when a raise starts in one band and finishes in a higher one, a fixed band rate would mislead you, but measuring the actual tax on the slice captures the blend automatically. The bands this calculator applies run 0 percent on the first NGN 800,000 of chargeable income, then 15 percent, 18 percent, 21 percent, 23 percent, and 25 percent on the slices above NGN 50 million.
A NGN 1 million raise on NGN 6 million
Take the defaults: a current chargeable income of NGN 6,000,000 and an extra NGN 1,000,000. Tax on NGN 6,000,000 works out to NGN 870,000 on these bands, and tax on NGN 7,000,000 works out to NGN 1,050,000. The extra million therefore costs NGN 180,000 in tax, a marginal rate of 18 percent, so you keep NGN 820,000, or 82 percent of the raise. Both NGN 6 million and NGN 7 million sit inside the band that runs from NGN 3 million to NGN 12 million, which is why the whole raise is taxed at the single 18 percent rate this calculator applies.
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When a raise straddles two bands
The single-rate case is the simple one. The interesting case is when extra income crosses a band boundary, and this is exactly where the empirical method earns its keep. Suppose your chargeable income is NGN 11,500,000 and you take on NGN 1,000,000 of extra work. Part of that million is taxed at 18 percent up to the NGN 12 million threshold, and the rest at 21 percent above it. The actual tax on the slice is NGN 195,000, an effective marginal rate of 19.5 percent across the raise, sitting neatly between the two band rates. No single band figure would have told you that, which is why entering your real numbers beats reaching for a bracket table.
A useful judgement call: a higher marginal rate is never a reason to turn down more income, because you always keep the majority of each extra naira at these rates. What it does change is the value of anything that reduces chargeable income, a pension top-up, eligible rent relief, a deductible premium, since each naira of relief saves you tax at your marginal rate, not your average. The common mistake is the fear that earning more pushes your whole income into a higher band and leaves you worse off. That is not how progressive bands work: only the slice above each threshold is taxed at the higher rate. Because the 2025 reform reshaped these bands and the figures are still settling, confirm the current thresholds and rates with the FIRS or your state internal revenue service before making a firm plan.
Can earning more ever leave me with less take-home?
No. Under progressive bands, a higher rate applies only to the portion of income above each threshold, never to the whole amount, so an extra naira always leaves you with more in hand. At the rates this calculator applies the worst case keeps 75 percent of income in the top band. The only thing that changes is how much of the increase you keep, which is what the marginal rate measures.
How do pension or rent reliefs change my marginal rate?
They lower your chargeable income, and each naira of relief saves tax at whatever band that last naira falls in. So if your marginal rate is 21 percent, a NGN 100,000 deductible contribution saves you NGN 21,000 of tax. This calculator works on chargeable income, the figure after such reliefs, so apply your deductions first, then test the marginal rate on what remains.