Overtime gross and after-tax pay.
Overtime, net of tax
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Overtime gross
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Tax on it
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What counts as overtime income here
Overtime in Nigeria is not a special category of pay with its own tax rate. It is ordinary employment income that happens to be earned beyond your contracted hours, and that distinction matters because of how this calculator treats it. You enter an hourly rate, the number of overtime hours, and a multiplier, and the tool multiplies the three to get gross overtime. The default multiplier of 1.5 is the familiar time-and-a-half, but Nigeria has no single statutory overtime premium across all sectors. Your figure comes from your contract, your collective agreement, or your sector's wage order, so set the multiplier to whatever your employer actually pays.
The base field is your annual chargeable income before the overtime, which is the income already sitting in your tax bands. The tool then asks a focused question: once this overtime lands on top, how much extra tax does it pull in, and what is left for you? That framing is the whole point. A naira of overtime is never taxed in isolation. It is taxed at whatever band your existing income has already climbed to.
Why your overtime is taxed at the top of your stack
Picture your income as a stack of layers filling the progressive bands from the bottom up. Under the structure this calculator applies, the first NGN 800,000 of chargeable income sits in a zero-rate band, the next slice up to NGN 3 million is taxed at 15 percent, the slice from NGN 3 million to NGN 12 million at 18 percent, then 21 percent, 23 percent, and a top rate of 25 percent above NGN 50 million. These are the bands the tool models from the 2025 tax reform that took effect in 2026, and you should treat each figure as the rate the calculator applies rather than a number I am certifying. The reform changed several thresholds, so confirm the current bands with your state internal revenue service, since employment tax under the PAYE system is administered and collected by the state revenue service where you work, not by the FIRS. The FIRS, now the Nigeria Revenue Service under the 2025 Act, sets the federal framework, but your PAYE deductions are remitted to your state.
Because your base income already fills the lower bands, overtime stacks on top and is taxed at your highest occupied band, your marginal rate. That is why the tool computes the tax on overtime as the difference between the tax on your income including the overtime and the tax on your income without it. One practical caution: the base and overtime figures you enter are treated as chargeable income directly. The tool does not subtract pension, the National Housing Fund, or rent relief inside this screen, so feed it income that is already net of those deductions if you want the most accurate marginal tax.
Forty hours at time-and-a-half, taxed
Take the defaults: an hourly rate of NGN 3,000, 40 overtime hours, a 1.5 multiplier, and a base chargeable income of NGN 6 million. Gross overtime is 3,000 times 40 times 1.5, which is NGN 180,000. Your base of NGN 6 million already reaches into the 18 percent band, so the whole NGN 180,000 of overtime falls inside that band. Using the rates this calculator applies, the extra tax is 18 percent of NGN 180,000, which is NGN 32,400, leaving NGN 147,600 in your pocket.
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The marginal-rate trap people miss
The common error is to assume your overtime is taxed at your average rate. In the example above the average tax across the whole NGN 6 million is roughly 14.5 percent, but the overtime is taxed at 18 percent because it sits at the margin. The higher your base income climbs, the more of your overtime the bands claim. A worker whose base already crosses NGN 25 million keeps less of each overtime naira than one earning under NGN 3 million, even for identical extra hours. If you are weighing whether a Saturday shift is worth it, the net figure here, not the gross, is the number to judge against your time.
Is overtime taxed more heavily than regular pay in Nigeria?
No. There is no penalty rate for overtime under the structure this tool models. It is taxed at exactly the same band as the rest of your income at that level. It can feel heavier only because it sits at the top of your stack and therefore meets your highest marginal rate rather than the lower bands beneath it.
Does a public-holiday or night shift change the tax?
The tax does not care why the hours were worked. A higher premium for nights or holidays simply means a larger gross figure, so enter the higher multiplier and the calculator taxes the bigger amount at your marginal band. Confirm your entitlement to those premiums in your contract or sector wage order, and check the current bands with your state internal revenue service.