How to Calculate Take-Home Pay Under Nigeria's 2026 Tax Law
A sourced worked PAYE example, rent relief at 20% capped at ₦500,000, minimum-wage exemption, and clear pension and NHF assumptions.
Updated 2026-09-28
Use the take-home calculator for a resident employee with one steady monthly salary. It annualises that salary for 12 months. Bonuses, multiple jobs, benefits in kind, part-year employment and other income need a fuller assessment.
The legal sources
The Nigeria Tax Act 2025, gazetted copy hosted by LIRS provides eligible deductions in section 30, claim requirements in sections 31–32, the employment minimum-wage exemption in section 163(1)(t), and tax bands in the Fourth Schedule. Section 58 also excludes minimum-wage earners from its ordinary rate provision.
The calculator does not apply the old Consolidated Relief Allowance. Do not compare the old relief amount directly with the new zero-rate band: one is an income deduction, the other a rate applied to taxable income.
Annual chargeable-income bands
| Portion of annual chargeable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000, up to ₦3,000,000 | 15% |
| Next ₦9,000,000, up to ₦12,000,000 | 18% |
| Next ₦13,000,000, up to ₦25,000,000 | 21% |
| Next ₦25,000,000, up to ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
These are marginal rates: reaching the 18% band does not tax all your income at 18%.
Worked example: ₦300,000 monthly gross
Assumptions: steady salary, all ₦300,000 is pensionable, standard 8% employee and 10% employer contributions, no NHF, no rent relief and no other deductions.
- Annual gross: ₦3,600,000.
- Employee pension: ₦288,000.
- Chargeable income: ₦3,312,000.
- PAYE: ₦0 on the first ₦800,000 + ₦330,000 on the next ₦2,200,000 + ₦56,160 on the remaining ₦312,000.
- Annual PAYE: ₦386,160.
- Monthly PAYE: ₦32,180.
- Monthly take-home: ₦243,820.
Employer pension is ₦360,000 annually under these assumptions. Gross pay plus that contribution is not a complete measure of employer cost: other benefits and obligations are excluded.
Rent paid is not the relief amount
Section 30(2)(a)(vi) allows 20% of annual rent paid, capped at ₦500,000, subject to accurate declaration and claim requirements. Keep evidence and confirm eligibility with the relevant tax authority.
For ₦1,000,000 eligible annual rent, relief is ₦200,000, not ₦1,000,000. In the example above:
- Chargeable income becomes ₦3,112,000.
- Annual PAYE becomes ₦350,160.
- Monthly take-home becomes ₦246,820.
- Tax saved is ₦36,000 annually, or ₦3,000 monthly—not the relief amount itself.
The relief reaches its ₦500,000 cap at ₦2,500,000 annual rent. Rent is not deducted again from payroll cash by this calculator: it is an expense to budget separately.
Minimum-wage employment exemption
For the calculator's sole-employment scenario, a gross salary of ₦70,000 monthly or less is exempt even with pension switched off. This is distinct from the first ₦800,000 of annual chargeable income being taxed at zero. Do not extend this example to other income sources or multiple jobs without checking your full position.
Pension: confirm the earnings base
PenCom's CPS guidance explains the standard minimum contributions of 8% employee and 10% employer and the pensionable-emoluments basis. Confirm the contract/payroll definition, normally at least basic salary, housing and transport; it is not automatically every allowance or automatically basic alone.
The calculator's default assumes all gross pay is pensionable. Uncheck that option to enter a confirmed monthly base. If only ₦200,000 of a ₦300,000 gross salary is pensionable, employee pension is ₦16,000 monthly, not ₦24,000. The separate pension checkbox is for cases where these contributions do not apply; it is not advice to opt out of a mandatory scheme. Higher rates or employer-funded employee contributions require a separate calculation.
NHF: use the confirmed contribution
The calculator asks for the monthly NHF contribution actually payable/remitted, or zero where none applies. It does not infer the base from basic salary or decide participation eligibility. Confirm those points with payroll/FMBN, especially if your payslip and the applicable rules disagree. Do not assume an older contribution rule is current without checking subsequent amendments and current payroll guidance.
Section 30 of the Tax Act lists individual NHF contributions as eligible deductions. The entered amount is subtracted from both chargeable income and payroll cash in this salary estimate. Contributions paid separately from payroll require reconciling the cash-flow presentation with your payslip.
What is not modelled
Section 30 also lists qualifying health-insurance contributions, owner-occupied housing-loan interest, and specified life-insurance/annuity payments. This tool does not calculate those reliefs, special-category exemptions, irregular income or a complete tax return. Actual deductions can make your result different.
Correction — 28 September 2026
The earlier calculator incorrectly treated the annual rent input as the deductible relief. It also assumed pension on all gross pay without an explicit base choice. The guide's universal “NHF is 2.5% of basic” instruction and attribution to the 2026 Act have been withdrawn. Earlier results using these assumptions should be recalculated. The unchanged no-rent, no-NHF example above remains valid under its stated pension assumption.