A monthly salary at this level is a common starting point for junior roles in Nigeria. This example shows exactly what PAYE takes from it, and what is left over.
These bands have applied since 1 Jan 2026, under the Nigeria Tax Act 2025, and they are the same ones the PAYE calculator runs behind the scenes, pension included.
The worked example
Multiply ₦150,000 by twelve for a yearly gross figure of ₦1,800,000.
Most employees also have a pension contribution deducted before PAYE is worked out, commonly 8% of gross pay. This guide uses 8% because that is the default the PAYE calculator itself uses; the facts registry behind this series carries no pension rate of its own, so check your own payslip or pension provider for the rate that actually applies to you.
- Gross pay: ₦1,800,000 a year.
- Pension at 8%: ₦144,000.
- Taxable income: ₦1,656,000.
Apply the bands to the taxable figure, not the gross one:
- First ₦800,000: nothing.
- Remaining ₦856,000, taxed at 15% on income from ₦800,001 to ₦3 million: ₦128,400.
Take-home pay in this example
PAYE for the year comes to ₦128,400, or ₦10,700 a month. Take-home pay is gross pay less pension less PAYE: ₦1,800,000 minus ₦144,000 minus ₦128,400, which comes to ₦1,527,600 a year, close to ₦127,300 a month.
Without pension, for comparison
Applying the bands straight to the ₦1,800,000 gross, with no pension taken off first, would give a bigger tax bill: ₦150,000 a year instead of ₦128,400. The gap is the pension contribution doing its job of reducing taxable income before PAYE applies.
Why this example lands where it does
Only ₦856,000 of the ₦1,656,000 taxable total in this example reaches 15% on income from ₦800,001 to ₦3 million; the rest sits inside the tax-free amount. That is why the tax stays modest, even though the taxed slice itself sits at 15%.
Nothing in this example touches 18% on income from ₦3 million to ₦12 million or any band above it. A salary at this level would need to roughly double before that becomes relevant, which the ₦300,000 example shows in full.
What this example looks like on a payslip
A payslip for this salary should show gross pay of ₦150,000, a pension line close to ₦12,000 a month, a PAYE deduction close to the figure in this example, and a net pay line matching the take-home amount above, give or take any other deduction that also applies.
If a payslip shows a much larger PAYE deduction than this example, it is worth asking payroll to show the calculation band by band, rather than assuming the higher figure is automatically correct.
What a higher salary changes
Earn more than this and, eventually, the whole tax-free amount is used up early in the year, leaving every later band to do more work on the rest. Earn less, and an even bigger share of the year's pay stays inside the tax-free amount, so the tax falls further still.
The bands themselves do not change with income; only how many of them a salary reaches does. That is the same idea behind every example in this series, whatever the starting number.
For the shared method behind all of them, see how PAYE is calculated step by step, which walks through the same slicing approach used above without tying it to one salary.
What this example still leaves out
Pension is the one deduction this example applies, since it is the calculator's default. It does not apply rent relief or any other deduction, since those depend on documents specific to one person, such as a tenancy agreement. A payroll or tax adviser can confirm which of those also apply to a specific job.
Checking the bands behind this example
A ₦150,000 salary is only one point on the ladder. The 2026 PAYE bands explained sets out every band this example draws on, and the PAYE and state tax hub links the rest of this series, including examples at higher salary levels.