How much of an increment you keep.
Net gain
—
Extra tax
—
You keep
—
Why your raise is taxed differently from your salary
When you negotiate a pay rise, the question that actually decides whether it was worth the conversation is not the headline number, it is how much of it survives tax and lands in your pocket. A raise is taxed at your marginal rate, which is the rate on your top slice of income, not your average rate across everything you earn. That is good news more often than people expect. Because Nigeria taxes income in rising bands, the early portions of your pay are taxed lightly or not at all, and only the new money on top is taxed at the higher band you have reached. This tool isolates exactly that: it computes your PAYE before and after the raise, with the same reliefs on both, and shows the extra tax, the cash you keep, and the keep percentage.
It is built for an employee weighing an offer or a counter, or for anyone who has heard the myth that a raise can push you into a higher bracket and leave you worse off. That myth does not hold under a progressive system. A raise can move part of your income into a higher band, but only the part that lands there is taxed at the higher rate. You never lose money by earning more.
The marginal band does the deciding
The keep percentage this tool reports is simply one minus your marginal rate on the increment. If the whole raise sits inside the 18 percent band, you keep 82 percent of it. If the raise is large enough to straddle two bands, part is taxed at the lower rate and part at the higher, and the keep percentage settles somewhere between the two. The marginal rate that applies to your increment is the figure that matters, and it is the rate this calculator uses. Nigeria has been through major tax reform whose bands phase in around 2026, so treat the band rates here as the values the tool applies and confirm the current marginal rates with the Federal Inland Revenue Service and your state internal revenue service, which collects personal income tax.
Reliefs matter at the edges. If a relief such as pension or rent relief is large enough to keep your income below a band threshold, the increment can be taxed more gently than the headline band suggests. The tool applies the same reliefs to the before and after figures, so what you see is the clean tax cost of the raise itself.
An NGN 1.2 million raise on an NGN 6 million salary
Suppose you currently earn NGN 6 million a year and you are offered an increment of NGN 1.2 million, with no extra reliefs entered. Your current salary already fills the lower bands, so the entire raise lands inside the 18 percent band. The extra PAYE is NGN 216,000, which is 18 percent of NGN 1.2 million. You keep NGN 984,000, or 82 percent of the raise. That keep rate is the headline output, and it is a clean illustration of marginal taxation: the rest of your salary is untouched, only the new slice is taxed. These figures use the rates this calculator applies.
Use the keep rate to negotiate in net terms
Here is the practical move most people miss. If you have a net monthly target in mind, work backwards through the keep rate to find the gross raise you actually need to ask for. Wanting an extra NGN 100,000 net a month, on income taxed at 18 percent, means asking for roughly NGN 122,000 gross a month, because you will keep 82 percent of it. Negotiating the gross number without doing this arithmetic is how people accept a raise that feels generous and then wonder why their take-home barely moved. Run your figures here first so you walk into the conversation knowing the gross that hits your net goal.
A second point worth flagging: a raise can change more than your income tax. If the rise lifts your basic, housing, and transport allowances, your pension contribution rises too, since it is a percentage of emolument. That is not lost money, it is forced saving into your Retirement Savings Account, but it does mean the cash that reaches your account each month grows by a little less than the after-tax raise alone would suggest. This tool focuses on the PAYE effect, so check your payslip for the pension change separately.
Can a raise ever leave me worse off?
No, not from income tax. Because only the new slice is taxed at the higher band, your take-home always rises when your gross rises. The fear comes from confusing the marginal rate with an average rate applied to everything. Where people do feel a pinch is at the loss of a means-tested benefit or threshold elsewhere, but that is a separate mechanism, not how PAYE bands work.
Why is the extra tax not just the increment times my old rate?
Because the relevant rate is your marginal band, not your average rate. Your average rate blends the tax-free floor and the lower bands across your whole salary, so it is lower than the band your raise lands in. The increment is taxed at the top, where the higher band applies, which is why this tool computes tax twice, on the old and new figures, and takes the difference rather than applying an average.