Nigeria PAYE Tax Calculator 2025

If you’ve ever opened your payslip and wondered how the Nigeria PAYE Tax Calculator determines your deductions, you’re not alone.

Many Nigerian employees search for an easy-to-use monthly PAYE calculator in Nigeria to understand their net pay.

The Personal Income Tax (PIT) system in Nigeria is set by the Nigeria Tax Act 2025, and employers are required to deduct taxes through the Pay As You Earn (PAYE) scheme.

In this guide, we’ll break down:

How PAYE is calculated in Nigeria
The latest annual and monthly tax bands
Common statutory deductions (pension, NHF, NHIS, rent relief)
A step-by-step formula you can use (or test with our Nigeria PAYE Tax Calculator 2025)
Example calculations so you can estimate your net pay in Nigeria

How PAYE Works in Nigeria

The Federal Inland Revenue Service (FIRS) defines tax bands annually, but in practice, deductions are made monthly from your salary.

The calculation steps are:

Gross Income → Your total monthly salary (basic + allowances).
Allowable Deductions → Pension (8%), NHF (2.5%), NHIS (5%), Rent Relief (20% of rent paid, capped at ₦500,000 annually ÷ 12), Life Assurance premiums.
Taxable Income = Gross – Allowable Deductions.
Apply Tax Bands → Use either annual or monthly rates.
Net Pay = Gross – (PAYE + other deductions).

Nigeria PAYE Tax Rates (Annual & Monthly Bands)

Below is the full breakdown of Nigeria PAYE tax bands under the Nigeria Tax Act 2025:

Annual PAYE Tax Bands (2025)

Band	Annual Income Range (₦)	Rate
1	First ₦800,000	0%
2	Next ₦2,200,000	15%
3	Next ₦9,000,000	18%
4	Next ₦13,000,000	21%
5	Next ₦25,000,000	23%
6	Above ₦50,000,000	25%

Monthly PAYE Tax Bands (2025)

Since many Nigerians prefer monthly tax calculators, here’s the pro-rated version:

Band	Monthly Income Range (₦)	Rate
1	First ₦66,667	0%
2	Next ₦183,333	15%
3	Next ₦750,000	18%
4	Next ₦1,083,333	21%
5	Next ₦2,083,333	23%
6	Above ₦4,166,667	25%

This makes it easier to see how much tax is deducted per month directly from your salary.

Example: Nigeria Monthly PAYE Tax Calculation

Let’s say your monthly gross salary is ₦1,000,000.

Pension (8%) = ₦80,000
NHF (2.5%) = ₦25,000
Rent Relief (Annual ₦300,000 → ₦25,000 per month)
Taxable Income = ₦1,000,000 – ₦80,000 – ₦25,000 – ₦25,000 = ₦870,000

Apply monthly bands:

First ₦66,667 @0% → ₦0
Next ₦183,333 @15% → ₦27,500
Next ₦620,000 @18% → ₦111,600

Monthly PAYE = ₦139,100

Net Pay = ₦1,000,000 – ₦80,000 – ₦25,000 – ₦25,000 – ₦139,100 = ₦730,900

Why Use a Nigeria PAYE Tax Calculator?

Using a PAYE calculator in Nigeria saves you from doing long manual calculations. It helps you:

Estimate monthly take-home pay (net salary)
Plan your budget with accurate income tax deductions
Compare gross salary offers during job negotiations
Verify if your employer is applying correct PAYE rates

Whether you search for Nigeria monthly tax calculator, net pay calculator Nigeria, or income tax calculator Nigeria, the logic is the same: calculate your taxable income, apply the tax bands, and subtract statutory deductions.

Key Takeaways

The Nigeria PAYE system is defined annually but applied monthly.
Statutory deductions include pension (8%), NHF (2.5%), NHIS (5%), and rent relief (20% of rent paid, capped at ₦500,000 per year).
The Nigeria PAYE Tax Calculator 2025 applies progressive tax rates from 0% to 25%.
Use a monthly PAYE calculator Nigeria to quickly estimate your net pay.