PAYE Tax Table Nigeria: How Much Should You Withhold?
The bands run on chargeable income, not on salary. Here's the table, what comes off before it, and what to withhold each month.
Cited against the NTA 2025 Act textIf you came here for the table, it is immediately below — the bands that have applied since 1 January 2026, with the tax each full band carries and the running total at the top of each one, so you can read the charge on any figure without walking it yourself.
Everything after the table is the part that makes it usable. The single most common PAYE error in Nigeria is not misreading the rates; it is applying them to the wrong number.
- The bands apply to chargeable income, not to salary. Pension, NHF and relief come off first — so the ₦800,000 figure everyone quotes is not a salary threshold, and reading it as one under-withholds on some staff and over-withholds on others.
- Rent relief is not automatic the way the old Consolidated Relief Allowance was. Where it isn't approved, the relief is zero — not a smaller number — and payroll has to ask a question CRA never required.
- Two employees on the same gross can owe different PAYE, because pension is charged on Basic + Housing + Transport only and NHF on Basic alone. Salary structure changes the answer before the table is ever reached.
The PAYE table, from 1 January 2026
| Band of chargeable income | Rate | Tax on the full band | Cumulative |
|---|---|---|---|
| First ₦800,000 | 0% | ₦0 | ₦0 |
| ₦800,000 – ₦3,000,000 | 15% | ₦330,000 | ₦330,000 |
| ₦3,000,000 – ₦10,000,000 | 18% | ₦1,260,000 | ₦1,590,000 |
| ₦10,000,000 – ₦25,000,000 | 21% | ₦3,150,000 | ₦4,740,000 |
| ₦25,000,000 – ₦50,000,000 | 23% | ₦5,750,000 | ₦10,490,000 |
| Above ₦50,000,000 | 25% | on the excess | — |
The cumulative column is the one worth keeping. It is the total PAYE on chargeable income exactly at the top of that band — so chargeable income of ₦10,000,000 carries ₦1,590,000 of tax, and anything above that is charged at the next rate on the excess only. Nobody pays their top rate on their whole income.
What the table is applied to — and it isn't salary
Chargeable income is what is left of gross annual salary after the statutory deductions and relief come off. Three of those four deductions have their own base, and none of them is gross:
| Comes off | Rate | Charged on |
|---|---|---|
| Pension | 8% | Basic + Housing + Transport |
| NHF | 2.5% | Basic alone |
| NHIS | as deducted | Where the employee is enrolled |
| Life assurance premium | as paid | Premiums actually paid |
| Rent relief | 20% | Rent paid, capped at ₦500,000 |
Read the third column again, because it is where payroll spreadsheets go wrong. Pension is 8% of Basic, Housing and Transport — Other Allowances are outside the pensionable base entirely. NHF is 2.5% of Basic alone, not of gross and not even of the pensionable base. Charging either on the whole salary overstates the deduction, understates chargeable income, and under-withholds tax you are liable to remit.
Rent relief: 20% of rent, capped — and not automatic
The Consolidated Relief Allowance is gone. In its place is a rent relief: 20% of rent actually paid, capped at ₦500,000 a year. The cap bites from about ₦2,500,000 of annual rent upward, so for many staff in the major cities it is simply a flat ₦500,000.
That second point is not a nuance. Core Ledger's payroll engine carries an explicit approval flag on the relief, and where it is not set the relief computed is zero — not a reduced figure, not a default. A business that assumes relief applies to everyone by default will under-withhold across its whole payroll; one that never collects the evidence will over-withhold and quietly cost its staff money every month.
The table, filled in
Pick a salary level and watch the deductions run before the bands do. Turn rent relief off to see what an unapproved claim actually costs.
The effective rate is always well below the band rate, because the bands charge each slice of income at its own rate — nobody pays their top rate on their whole salary. Turn rent relief off to see what an unapproved claim costs: on this structure it is the difference between two real monthly figures, not a rounding difference.
The same four salaries side by side, on the same structure, with and without approved rent relief:
| Monthly salary | PAYE / month | Without relief | Effective rate |
|---|---|---|---|
| ₦150,000 | ₦9,249 | ₦10,599 | 6.2% |
| ₦400,000 | ₦44,096 | ₦48,416 | 11.0% |
| ₦1,000,000 | ₦141,005 | ₦149,755 | 14.1% |
| ₦2,500,000 | ₦432,663 | ₦442,246 | 17.3% |
Two things stand out. The effective rate stays far below the band rate at every level — the ₦2,500,000-a-month earner sits in the 23% band and pays an effective 17.3%. And the cost of an unapproved rent relief claim rises with salary: ₦1,350 a month at the bottom of this table, ₦9,583 a month at the top.
Getting to the monthly figure
PAYE is an annual charge. The monthly deduction is the annual figure divided by twelve — not a separate monthly computation, and not the bands applied to a month's salary. Applying an annual band table to a monthly figure is the second most common error on this subject, and it produces a number that is wrong by an order of magnitude.
Where an employee joins or leaves mid-year, the annual charge is computed first and then prorated for the part of the period actually worked. Same order: annual charge, then the fraction — never bands applied to a stub period as though it were a year.
Why take-home isn't gross minus chargeable income
A point that trips up otherwise careful payroll checks: relief reduces the tax base but never leaves the payslip. Rent relief is not money deducted from the employee — it is an amount the tax simply isn't charged on.
What actually leaves a payslip is pension, NHF, NHIS, any life assurance premium, and the PAYE itself. Nothing else. If your take-home reconciliation subtracts relief as though it were a deduction, every net-pay figure you produce will be too low by that amount, and the difference will not tie to your bank.
Relief changes what you are taxed on. It does not change what you are paid. Confusing the two is the difference between a payroll that reconciles and one that doesn't.
Who actually pays nothing
The first ₦800,000 of chargeable income is charged at nil. Because that is chargeable income rather than salary, the salary at which PAYE starts is higher than ₦800,000 — on the structure used above and with no rent relief at all, a gross salary of roughly ₦873,800 a year is the last one that pays nothing. Add approved rent relief and that figure rises further.
Which cuts both ways in practice. Staff you assumed were taxable may not be; staff you assumed were exempt because they are “under the threshold” may not be either, once their structure is taken into account. It is worth running the actual computation for anyone near the line rather than reasoning about it from gross.
What late remittance costs
Withholding correctly is only half the obligation; the other half is remitting on time. The Nigeria Tax Administration Act 2025 sets one late-remittance regime covering PAYE and withholding tax: a flat penalty on whatever was not remitted when due, plus interestNTAA 2025 s.65. The flat component is 10%, and the interest is pegged to the CBN Monetary Policy Rate plus a spread the Minister sets — not gazetted at the time of writing.
Worth noting that this is a penalty on the employer, not the employee. The tax was the staff member's; the failure to pass it on is the business's, and it is charged as a distinct statutory expense rather than folded into the PAYE itself.
What actually goes wrong
Charging pension and NHF on gross. Pension is on Basic + Housing + Transport; NHF is on Basic. Charging either on the whole salary overstates the deduction and under-withholds the tax.
Treating the 0% band as a salary threshold. It is a chargeable-income band. Staff above it in gross terms can still owe nothing, and reasoning from gross gets the near-the-line cases wrong in both directions.
Assuming rent relief applies to everyone. Without an approved, evidenced claim it is zero. Assume it and you under-withhold for the whole payroll.
Applying the annual bands to a monthly salary. The charge is annual, then divided by twelve. Mid-year joiners are prorated after the annual charge, not computed on a stub year.
Subtracting relief from net pay. Relief lowers the tax base; it never leaves the payslip. Deduct it and your net pay will not reconcile to your bank.
Where to go next
- To run this on a real salary structure — four components, rent, NHIS and life assurance — use the PAYE calculator. It takes the same seven inputs the payroll engine does.
- To see the current bands against the ones they replaced, What changed in 2026 runs both regimes on the same salary side by side.
- For the wider picture — company income tax, the Development Levy, capital allowance and where PAYE sits among them — the practical guide to the Nigeria Tax Act 2025.
Everything above is general information about published rules, not advice about your payroll. The bands, rates and caps are the same ones Core Ledger's payroll engine computes against, and the worked figures on this page are produced by that computation rather than typed in — but a real payroll carries employee-specific facts this page cannot see. For anything near a threshold, or any employee whose structure is unusual, take it to a professional.
The Core Ledger team tracks Nigerian tax legislation so the platform's compliance tooling — and this blog — stay current with it.