PAYE
(Pay As You Earn)
/peɪ æz juː ɜːn/
What is PAYE?
PAYE (Pay As You Earn) is a system where employers deduct income tax directly from employee salaries before paying them. Instead of employees paying tax at year-end, it's collected throughout the year with each paycheck.
In Nigeria, PAYE applies to all employed individuals and is calculated using progressive tax brackets — the more you earn, the higher your marginal rate (from 7% to 24%).
PAYE in Nigeria
Nigerian PAYE is governed by the Personal Income Tax Act (PITA) and administered by State Boards of Internal Revenue. Tax rates range from 7% to 24% across six brackets. Employers must remit PAYE to tax authorities by the 10th of each month.
Example
If you earn ₦500,000/month (₦6M/year), after CRA and pension deductions, your PAYE would be approximately ₦780,800/year (₦65,067/month). Your take-home would be about ₦434,933/month.
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