Nigeria's PAYE has run on six bands since 1 Jan 2026, the date the Nigeria Tax Act 2025 took effect. Six numbers, one ladder, and every naira you earn sits on a rung.
The first ₦800,000 you earn in a year carries no tax at all. Above that line, five more bands take a rising share of whatever falls inside each one.
The six bands for 2026
Here is the full ladder, from the bottom up:
- 0% on the first ₦800,000 a year.
- 15% on income from ₦800,001 to ₦3 million.
- 18% on income from ₦3 million to ₦12 million.
- 21% on income from ₦12 million to ₦25 million.
- 23% on income from ₦25 million to ₦50 million.
- 25% on income above ₦50 million.
Six bands, six rates. Most employees on a normal salary never see the last two.
How the bands stack, not replace each other
Each band only taxes the slice of income sitting inside it. Cross into a new band and only the extra income above the line moves to the new rate.
This is why two people three naira apart in yearly pay end up owing almost the same tax. Only that last naira shifts to a higher rate, not the whole salary.
A worked example
Say your pay works out to ₦400,000 a month, or ₦4,800,000 a year gross. Most employees also have a pension contribution deducted before PAYE, commonly 8% of gross pay, which 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 for the rate that applies to you. Pension at 8% comes to ₦384,000, leaving taxable income of ₦4,416,000.
The first ₦800,000 of that is free. The next ₦2,200,000 sits in the 15% band, so it owes ₦330,000. The remaining ₦1,416,000 falls in the 18% band, so it owes ₦254,880. Add the two together: ₦584,880 a year, or ₦48,740 a month.
Now take a smaller salary: ₦200,000 a month, or ₦2,400,000 a year gross. Pension at 8% is ₦192,000, leaving taxable income of ₦2,208,000. The first ₦800,000 is still free.
The remaining ₦1,408,000 fits entirely inside the 15% band, since it is less than that band's full width, so the tax comes to ₦211,200 a year, or ₦17,600 a month. One salary touches two bands; the other only reaches one.
Try the PAYE calculator with your own numbers. It runs the same steps automatically, pension included, and shows the take-home pay left over.
What replaced the old system
The Nigeria Tax Administration Act 2025 sets out how tax is registered, returned and collected, and it took effect alongside the Nigeria Tax Act 2025 on the same date. Between the two Acts, the old consolidated relief allowance and the bands that went with it are gone.
State internal revenue services still collect the tax from most employees; the bands themselves are national, so the same ladder applies whether you live in Lagos, Kano or Enugu. Our guide to Lagos State tax filing goes into how that state-level collection actually works if you want the detail.
Common mistakes reading the bands
- Applying one rate to an entire salary, instead of only the slice inside each band.
- Comparing a 2026 payslip to an old one without checking which bands moved.
- Treating ₦800,000 as a monthly figure rather than a yearly one.
- Assuming a payroll system was updated correctly without checking a payslip against the bands above.
- Reading a band's rate as if it were the tax on everything below it too, rather than just that slice.
A payslip that does not match this ladder is worth asking your employer or a payroll adviser about, rather than assuming the software is right by default.
Every article in our PAYE and state tax hub works from this same ladder, so once you have it, the rest follows easily. Keep the compliance calendar open too, for the filing dates that sit alongside it.