Question 1

What is PAYE in Nigeria?

Accepted Answer

PAYE (Pay As You Earn) is a method of income tax collection where employers deduct tax from employees' salaries before payment. It's the most common way Nigerian employees pay income tax.

Question 2

What deductions are taken from my salary?

Accepted Answer

Common deductions include: Personal Income Tax (PAYE), Pension (8% employee contribution), National Housing Fund (NHF - 2.5%), and National Health Insurance Scheme (NHIS - 5%). Not all employers apply NHF and NHIS.

Question 3

What is the tax-free threshold for 2026?

Accepted Answer

Under the Nigeria Tax Act 2025 (effective January 2026), the first ₦800,000 of annual income is tax-free. This means if you earn ₦800,000 or less per year, you pay zero income tax.

Question 4

How is pension calculated?

Accepted Answer

Under the Pension Reform Act, employees contribute 8% of their gross monthly salary to their Retirement Savings Account (RSA). Employers contribute 10%. The employee's 8% is deducted before tax is calculated.

Question 5

Is NHF mandatory?

Accepted Answer

Yes, for employees earning above the national minimum wage in organizations with 5+ employees. The contribution is 2.5% of basic salary, capped at a maximum contribution.

Annual Taxable Income	Tax Rate
₦0 - ₦800,000	0%
₦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%

Nigerian PAYE Salary Calculator 2026

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How PAYE Works in Nigeria

2026 Tax Brackets

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