What changed in 2026
The Nigeria Tax Act 2025 took effect on 1 January 2026 (transition guidance) and replaced the old personal income tax rules. The consolidated relief allowance no longer applies. Instead, chargeable income is taxed in bands that start with 0% on the first ₦800,000, and employees can claim a rent relief. The Joint Revenue Board’s 2026 PIT guidelines set out how employers apply the rules.
PAYE bands for 2026
| Chargeable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 | 15% |
| Next ₦9,000,000 | 18% |
| Next ₦13,000,000 | 21% |
| Next ₦25,000,000 | 23% |
| Above ₦50,000,000 | 25% |
From gross pay to chargeable income
Chargeable income is the employee’s taxable emoluments, including the taxable value of benefits in kind, less eligible deductions. Eligible deductions include the employee’s pension contribution, National Housing Fund contribution and National Health Insurance contribution, and, with evidence, interest on a loan for an owner-occupied home and life insurance premiums.
Rent relief replaces the old allowance: 20% of the annual rent the employee actually pays, up to a maximum of ₦500,000 a year, supported by evidence.
Statutory contributions
- Pension: under the Pension Reform Act 2014, the minimum is 8% of monthly emoluments from the employee and 10% from the employer, paid to each employee’s Pension Fund Administrator. See PenCom for current rules.
- National Housing Fund: 2.5% of the employee’s basic salary, deducted and remitted to the Federal Mortgage Bank of Nigeria.
- NSITF: the employer contributes to the Employees’ Compensation Scheme, generally 1% of the total monthly payroll.
- Industrial Training Fund: employers above the statutory threshold contribute 1% of annual payroll to the ITF.
Which state gets the PAYE?
PAYE is paid to the tax authority of the state where the employee is resident for tax purposes, which is not always where the office is. Employers with staff in several states remit to each state separately, with schedules showing each employee. Getting residence right matters: if an employee’s residence is later decided differently, tax may need to be refunded by one state and paid to another.
Monthly and annual tasks
- Run payroll, applying PAYE on a cumulative basis across the year.
- Remit PAYE to each relevant state tax authority with a schedule of employees, by the deadline your state sets.
- Remit pension contributions to each employee’s PFA promptly after payday, with the PFA schedule.
- Remit NHF and other contributions with their schedules.
- Give employees payslips showing gross pay, deductions and net pay.
- At the end of the year, file the employer’s annual return of emoluments with each state where you have employees.
Where software helps
Payroll software applies the 2026 bands and reliefs consistently, keeps the cumulative records the guidelines require and produces remittance schedules by state and PFA. RinHR, our product, calculates Nigerian payroll under the 2026 rules and prepares review schedules; its payroll is in early access, and it does not yet file with state authorities or produce bank payment files. Read our comparison of HR and payroll software in Nigeria for alternatives.