₦800,000 is the amount of taxable income you can have in a year before PAYE applies at all. It has applied since 1 Jan 2026, alongside the rest of the Nigeria Tax Act 2025.
Below that line, the rate is flat: 0% on the first ₦800,000 a year. Above it, five more bands take over, one slice at a time.
An example: what it looks like month to month
Spread evenly across twelve months, ₦800,000 works out to roughly ₦66,667 a month. Anyone whose taxable income sits at or under that rough monthly figure, with no other income, keeps every naira of it.
This is taxable income, not gross pay. Most employees have a pension contribution deducted first, commonly 8% of gross pay, so a gross salary somewhat above ₦66,667 a month can still land under the threshold once pension is taken off. The PAYE calculator applies that 8% by default; check your own payslip for the rate that actually applies to you.
This is a rough guide only. PAYE is worked out on the yearly total, not month by month, so a bonus or a raise part-way through the year can still push the yearly figure over the line even if each individual month looked small.
Someone paid irregularly, such as a seasonal worker or a commission-based role, needs to add up the whole year before checking against the threshold. A quiet month with no pay does not lower the yearly total; it just means later months carry more of it.
What happens the moment you cross it
Nothing dramatic happens to the first ₦800,000. It stays free. Only the amount above it moves into 15% on income from ₦800,001 to ₦3 million, and only that slice is taxed at the new rate.
Someone earning exactly ₦800,000 and someone earning one naira more owe almost the same amount. The gap in tax is tiny; it is not a cliff edge.
If your gross pay is ₦900,000 a year, an 8% pension contribution of ₦72,000 brings taxable income to ₦828,000. Only the last ₦28,000 above the threshold moves into the next band, at 15%. That comes to ₦4,200 in tax for the whole year, not a flat rate applied to the full ₦900,000, and not applied to the full amount above the threshold before pension either.
Why there's no separate allowance underneath it
Under the old system, a separate relief was subtracted from income before any band applied. Abolished from 1 January 2026, and the tax-free amount now does that job on its own, as the first band rather than a deduction calculated beforehand.
That makes the sum simpler to follow: there is one ladder, and the bottom rung happens to be free. You do not add the old-style relief on top of the tax-free amount; the tax-free amount already does that work by sitting at 0%.
An employer working from an old payroll template that still tries to calculate a separate relief on top of these bands is applying a rule that no longer exists. Ask for the calculation to be shown, band by band, if a payslip looks unfamiliar.
Common mix-ups about the threshold
- Reading ₦800,000 as a monthly figure and assuming a much higher salary is tax-free.
- Forgetting that bonuses and allowances usually count towards the yearly total.
- Assuming the threshold is unique to one state; the bands are national, even though state revenue services do the actual collecting for most employees.
- Confusing a tax-free salary with a tax-free household; a second earner in the same home has their own threshold, not a shared one.
For the full ladder above this line, see the 2026 PAYE bands explained, or run your own numbers through the PAYE calculator. If your income sits close to the threshold either way, it is worth checking again after any pay rise, since a small increase is what usually pushes a salary from one side of the line to the other.