PAYE Tax Table Nigeria 2026: Complete Guide + Examples

If you earn a salary in Nigeria, PAYE tax is one of the first deductions you will see on your payslip. The 2026 PAYE structure uses progressive tax bands, with a tax-free threshold of ₦800,000 and marginal rates rising from 15% to 25% above that level.

Under the Nigeria Tax Act 2025, the current bands apply from 1 January 2026, and the tax is computed on chargeable income, not on every naira of gross salary.

What PAYE Means

PAYE stands for Pay-As-You-Earn, which is the system used to deduct personal income tax from employment income as salary is paid. In practice, your employer calculates the tax, deducts it monthly, and remits it to the relevant tax authority under the personal income tax framework. That is why payroll teams, HR staff, and employees all need the same tax table to avoid errors.

For Nigerian employees, the key point is that PAYE is progressive. This means you do not pay one flat rate on your entire income; each part of your taxable income is taxed in its own band. This structure is important because it affects both monthly take-home pay and annual tax planning.

PAYE Tax Table

The current 2026 personal income tax bands for Nigeria are shown below.

These are marginal rates, so the rate in each row applies only to the slice of income within that row, not the whole amount. For example, if taxable income is ₦5,000,000, only the portion above ₦3,000,000 moves into the 18% band.

What Counts As Chargeable Income

PAYE is not computed on gross salary alone. The taxable base is chargeable income after statutory deductions and allowable reliefs are removed, which is why two employees on similar gross pay can end up with different tax figures. In payroll terms, this is the figure you get after statutory deductions and relevant reliefs have been applied.

Under the current reform-based guidance, deductions and relief items referenced in payroll explanations include pension contribution, NHF, health insurance contributions where applicable, life assurance premiums, and rent relief where properly documented. The old Consolidated Relief Allowance model is described in current commentary as having been replaced in the new framework.

How To Calculate PAYE

To calculate PAYE correctly, the usual sequence is:

1. Start with annual gross income.
2. Subtract statutory deductions and eligible reliefs to arrive at chargeable income.
3. Apply the tax bands progressively from the lowest band upward.
4. Divide by 12 to estimate monthly PAYE if you are working from annual figures.

The practical reason for this sequence is that the tax bands are annual, even though payroll is processed monthly. That means annualisation matters when you are checking salary slips or building payroll templates.

Simple formula

$ \text{PAYE} = \text{Tax on each band of chargeable income} $

This formula is easy to apply once chargeable income is known. The difficult part is usually identifying which deductions are allowed and documenting them properly, especially for rent relief and employer-supported payroll records.

Worked Examples

Below are simplified examples using the current 2026 tax bands. For clarity, these examples focus on annual taxable income, so you can see how the bracket system works.

Example 1: ₦1,000,000 taxable income

• First ₦800,000 at 0% = ₦0.
• Remaining ₦200,000 at 15% = ₦30,000.
• Annual PAYE = ₦30,000.
• Monthly PAYE = ₦2,500.

This example shows how the tax-free threshold works in practice. Anyone whose chargeable income stays within the first ₦800,000 pays no income tax on that portion.

Example 2: ₦5,000,000 taxable income

• First ₦800,000 at 0% = ₦0.
• Next ₦2,200,000 at 15% = ₦330,000.
• Remaining ₦2,000,000 at 18% = ₦360,000.
• Annual PAYE = ₦690,000.
• Monthly PAYE = ₦57,500.

This is a useful mid-income example because it crosses two tax bands. The effective tax rate here is lower than the top marginal rate because part of the income still sits in lower bands.

Example 3: ₦20,000,000 taxable income

• First ₦800,000 at 0% = ₦0.
• Next ₦2,200,000 at 15% = ₦330,000.
• Next ₦9,000,000 at 18% = ₦1,620,000.
• Remaining ₦8,000,000 at 21% = ₦1,680,000.
• Annual PAYE = ₦3,630,000.
• Monthly PAYE = ₦302,500.

This example is relevant for senior professionals, executives, and high-earning employees. It shows why the bracket structure matters more than simply looking at the top rate.

Reliefs And Deductions

In payroll discussions, reliefs are the items that reduce taxable income before tax is calculated. Current guidance around the 2026 framework points to statutory deductions such as pension and health-related contributions, plus rent relief where supported by documentation. Because tax treatment depends on the exact facts, payroll records should always match what is actually paid and supported.

A practical way to think about reliefs is this: gross salary is the starting point, and chargeable income is the amount left after approved deductions. That is why the same gross pay does not always produce the same PAYE.

PAYE And Minimum Wage

Current professional tax summaries state that employees earning not more than the national minimum wage of ₦70,000 per month are not liable to PAYE deduction. This is important for payroll processing because it gives employers a clear exemption point for very low-income earners. It also means the monthly salary level, not only the annual total, matters in some payroll setups.

This exemption is widely referenced in 2026 tax commentary and aligns with the policy direction toward relief for low-income earners. For payroll officers, it is still necessary to confirm the exact employment structure and taxable pay components before applying the exemption.

Monthly Payroll View

Because most employees think in monthly terms, the annual tax table is often converted into monthly estimates. A simple payroll view can help you interpret deductions on a payslip.

These figures are useful as a guide when checking whether a payroll deduction appears broadly consistent with the annual band system. They are not a substitute for the full payroll computation where statutory deductions and allowances are applied in detail.

Common Payroll Mistakes

A frequent mistake is to apply the highest rate to the full salary instead of using progressive bands. That produces an inflated deduction and can distort take-home pay calculations. Another mistake is using gross salary without deducting approved reliefs first, which can also overstate PAYE.

Other errors include:

• Mixing annual bands with monthly pay without annualising correctly.
• Ignoring the tax-free threshold on the first ₦800,000.
• Leaving out statutory deductions supported by payroll records.
• Using outdated tax tables from prior years.

These mistakes are common in manual spreadsheets, which is why many payroll teams use calculators and templates to check results before remittance.

Employer Filing Duty

PAYE is not only about deduction; it also involves remittance. Under the PAYE system, employers act as collection agents and are expected to deduct and remit tax through the appropriate tax authority process. This is why payroll calendars matter just as much as rate tables.

In practical payroll administration, the legal and operational focus is on accurate deduction, timely remittance, and documentation that supports each employee’s tax computation. That record-keeping becomes especially important during audits, salary reviews, or when an employee requests a payslip explanation.

How A Salary Example Works

Let’s take a simplified salary structure with annual gross income of ₦6,000,000 and assumed allowable deductions that bring chargeable income down to ₦5,500,000. Once chargeable income is known, the tax table is applied progressively, not as one flat percentage. The result is then divided by 12 to estimate monthly PAYE.

This is why payroll software, spreadsheets, and tax calculators are useful. They reduce manual errors and make it easier to test how changes in rent relief, pension, or gross pay affect net salary.

Conclusion

The 2026 PAYE tax table in Nigeria uses a ₦800,000 tax-free threshold and progressive bands from 15% to 25%, with tax computed on chargeable income rather than gross salary. For salary earners and payroll teams, the most important steps are to identify the correct taxable base, apply the bands progressively, and keep proper records for remittance. This article is for educational purposes only and does not constitute professional advice. Consult a qualified professional for your specific situation.