How to Calculate Your Real Take-Home Pay Under Nigeria's 2026 Tax Law

The Consolidated Relief Allowance is gone and the first ₦800,000 of chargeable income is now tax-free. Here is exactly how PAYE, pension and NHF are calculated from January 2026, worked through step by step.

Updated 2026-09-10

Nigeria's personal income tax changed more on 1 January 2026 than at any point in the last two decades. If you are still working out your pay using the old Consolidated Relief Allowance, your figures are wrong — and for most people, wrong in a direction that costs you money in a negotiation.

This guide walks through the new system with the arithmetic shown, so you can check your own payslip rather than trusting it.

What actually changed

Three things, and the first is the one people miss.

The Consolidated Relief Allowance was abolished. Under the old Personal Income Tax Act, you got relief equal to the higher of ₦200,000 or 1% of your gross income, plus 20% of gross. On a ₦1,000,000 annual salary that was ₦400,000 of relief. It no longer exists.

A flat ₦800,000 zero-rate band replaced it. The first ₦800,000 of your chargeable income attracts 0% tax. For most workers this is more generous than the CRA was, and it means that anyone on the ₦70,000 national minimum wage now pays no PAYE at all.

The band structure was rebuilt. Six bands running from 0% to 25%, replacing the old 7%–24% ladder that started taxing from the first naira above relief.

The 2026 bands

Two warnings about this table. First, several widely circulated summaries of the new law give the third band as ₦7,000,000 wide. It is ₦9,000,000 — the band runs to ₦12,000,000, not ₦10,000,000. Second, the rates are marginal: you pay 15% only on the portion of income inside that band, never 15% on everything.

Worked example: ₦300,000 a month

Take a gross salary of ₦300,000 a month, or ₦3,600,000 a year. No NHF, no rent relief.

Step 1 — pension. Employee pension is 8% of pensionable emoluments:

₦3,600,000 × 8% = ₦288,000

Step 2 — chargeable income.

₦3,600,000 − ₦288,000 = ₦3,312,000

Step 3 — apply the bands.

• First ₦800,000 at 0% = ₦0
• Next ₦2,200,000 at 15% = ₦330,000
• Remaining ₦312,000 at 18% = ₦56,160

Total annual PAYE = ₦386,160, or ₦32,180 a month.

Step 4 — net pay.

₦3,600,000 − ₦288,000 − ₦386,160 = ₦2,925,840 a year, which is ₦243,820 a month.

Your effective rate on gross is 10.7%. Your marginal rate — what the next naira costs you — is 18%.

The deductions people get wrong

NHF is 2.5% of basic salary, not of gross. On a ₦300,000 gross with a ₦120,000 basic, NHF is ₦3,000 a month, not ₦7,500. Employers who deduct 2.5% of gross are over-deducting.

NHF is now voluntary in the private sector. Under the 2026 Act, private-sector employees choose whether to contribute. It remains mandatory in the public sector. Many private employers still deduct it by default because that is what their payroll has always done. If you would rather contribute to your pension or keep the cash, that is a conversation with your HR department, not with FIRS.

Pension is 8% of pensionable emoluments, not of everything. Pensionable emoluments are normally basic salary plus housing and transport allowances. Bonuses, commissions and overtime are generally excluded unless your contract says otherwise.

Your employer pays more than you do. They contribute a minimum of 10% on top of your 8%. On a ₦300,000 salary you cost them ₦330,000 a month. That figure matters in a negotiation, because it is the number the business is actually weighing.

Rent relief: the honest answer

The 2026 Act introduced a rent relief, and published summaries of it conflict. Some describe it as 20% of rent paid capped at ₦500,000; others describe a flat ₦200,000. Both cannot be right.

Rather than pick one and present it as fact, we have left rent relief off by default in our calculator and let you enter a figure if you have confirmed your position. If you are claiming it, get it confirmed by a tax practitioner or your state revenue authority first, and keep your tenancy documentation.

Old law versus new: are you better off?

For a ₦3,600,000 annual salary:

You are better off by roughly ₦4,000 a month at this level. The gains are largest for lower earners — anyone whose chargeable income sits under ₦800,000 now pays nothing at all — and they narrow as income rises, because the 18% and 21% rates bite harder than the old ladder did above roughly ₦4m a year.

Checking your own payslip

1. Find your gross, your basic, and your pension deduction.
2. Confirm pension is 8% of basic + housing + transport, not 8% of gross.
3. Confirm NHF, if deducted, is 2.5% of basic.
4. Subtract both from annual gross to get chargeable income.
5. Run the bands. If the result differs from your payslip by more than a rounding amount, ask payroll.

The most common error is not fraud — it is payroll software still configured for the old CRA formula. It is worth checking, and it is worth asking, because the correction is backdated.