Tax Calculator
Understanding tax brackets
How Nigeria's progressive tax system works
Understanding Tax Brackets
Nigeria uses a progressive tax system. This means higher income is taxed at higher rates - but only the portion above each threshold.
2026 Tax Brackets
| Annual Income | Tax Rate |
|---|---|
| ₦0 - ₦800,000 | 0% (Tax-free!) |
| ₦800,001 - ₦3,000,000 | 15% |
| ₦3,000,001 - ₦12,000,000 | 18% |
| ₦12,000,001 - ₦25,000,000 | 21% |
| ₦25,000,001 - ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
The ₦800,000 Tax-Free Threshold
The biggest change in 2026: the first ₦800,000 of your income is completely tax-free!
Who benefits most?
How Progressive Tax Works
Common misconception: "If I earn ₦3,000,001, I pay 18% on everything."
Wrong! Here's what actually happens:
| Income Portion | Rate | Tax |
|---|---|---|
| First ₦800,000 | 0% | ₦0 |
| Next ₦2,200,000 | 15% | ₦330,000 |
| The extra ₦1 | 18% | ₦0.18 |
| **Total Tax** | **₦330,000.18** |
You only pay the higher rate on income above each threshold.
Effective Tax Rate
Your effective rate is your total tax divided by gross income. It's always lower than your marginal (highest) bracket rate.