Understanding your PAYE obligations is essential for every Nigerian employee and business owner. This guide walks you through the current tax brackets, available reliefs, and practical steps to calculate your personal income tax.
What is PAYE?
PAYE stands for Pay As You Earn. It's the system through which employers deduct income tax from employees' salaries and remit it to the relevant tax authority.
Current Tax Brackets (2026)
Nigeria uses a graduated tax system with six bands:
- First ₦300,000 — 7%
- Next ₦300,000 — 11%
- Next ₦500,000 — 15%
- Next ₦500,000 — 19%
- Next ₦1,600,000 — 21%
- Above ₦3,200,000 — 24%
Available Reliefs
Before calculating your tax, you can claim certain reliefs that reduce your taxable income:
- Consolidated Relief Allowance (CRA): 20% of gross income + ₦200,000 or 1% of gross income (whichever is higher)
- Pension contributions: Up to 8% of basic salary
- National Housing Fund: 2.5% of basic salary
- Life insurance premiums
How to Calculate
1. Determine your gross annual income 2. Subtract all applicable reliefs 3. Apply the graduated tax rates to the remaining taxable income 4. The total is your annual PAYE liability
How Erin Helps
Erin automates this entire process. As you earn, your tax obligation is calculated in real time — no spreadsheets, no manual math. You always know what you owe.