Payroll guide · Nigeria
Everything an employer needs to run compliant payroll in Nigeria — PAYE bands, statutory deductions, the computation order, filing deadlines and the mistakes that most often surface in an audit.
Nigerian payroll changed more in January 2026 than it had in the previous decade. The Nigeria Tax Act 2025 took effect on 1 January 2026, abolished the Consolidated Relief Allowance, introduced a rent relief, and replaced the old 7% to 24% bands with a six-band table starting at zero.
Any payroll still running the old PITA method is non-compliant from January 2026. This guide covers the new bands, the split pay structure that pension keys off, and the four separate agencies a Nigerian employer remits to.
The figures below are compiled from public guidance and are correct to the best of our research at the time of writing. Nigeria rates change with each budget cycle, and published sources sometimes disagree. Confirm against the State Internal Revenue Service before running a live payroll.
Payroll obligations in Nigeria are administered by the State Internal Revenue Service, alongside the social security and levy bodies set out below. Every employer is responsible for computing deductions correctly, remitting them on time and retaining the records — the obligation sits with the employer, not the employee, and it does not transfer to a bookkeeper or an accountant.
| Chargeable income (NGN) | Rate |
|---|---|
| 0 – 800,000 | 0% |
| 800,001 – 3,000,000 | 15% |
| 3,000,001 – 12,000,000 | 18% |
| 12,000,001 – 25,000,000 | 21% |
| 25,000,001 – 50,000,000 | 23% |
| Above 50,000,000 | 25% |
Annual chargeable income in NGN under the Nigeria Tax Act 2025, effective 1 January 2026. Employees earning NGN 800,000 a year or less pay no PAYE.
| Deduction | Employee | Employer | Rules |
|---|---|---|---|
| Pension — PenCom | 8% | 10% | 18% in total, computed on basic plus housing plus transport, not on gross. Deductible before PAYE. |
| National Housing Fund | 2.5% of basic | — | Voluntary for private-sector employees under the NTA; mandatory in the public sector. |
| NSITF | — | 1% | Employer-only, on monthly payroll. |
| Industrial Training Fund | — | 1% | Employer-only, on annual payroll. Applies at five or more employees or NGN 50 million turnover. Up to half is reclaimable against approved staff training. |
Our free calculator applies every deduction on this page — including lower earnings limits and relief caps — and shows the PAYE working band by band.
Open the Nigeria calculator| Relief | Value | Notes |
|---|---|---|
| Tax-free band | NGN 800,000/year | Roughly NGN 66,667 a month, aligned with the national minimum wage. |
| Pension contributions | Fully deductible | 8% of basic plus housing plus transport. |
| Rent relief | 20% of annual rent | Capped at NGN 500,000 a year. Requires a lease and receipts. |
| Consolidated Relief Allowance | Abolished | Removed by the NTA. Payrolls still applying it are non-compliant. |
Getting the order right matters more than getting any single rate right. Applying a deduction after the bands instead of before it changes the tax for every employee on the payroll.
Start with total taxable emoluments — basic, housing, transport and other regular allowances. Deduct the employee pension contribution of 8% of basic plus housing plus transport. Deduct NHF where it applies. Deduct rent relief where documented. Apply the annual band table to what remains, then divide by twelve for the monthly deduction.
An employee on NGN 600,000 a month gross:
Employer cost on top of gross: pension at 10% of pensionable pay (48,000), NSITF at 1% (6,000) and ITF at 1% where applicable (6,000). Rent relief is not claimed in this example.
| When | What is due |
|---|---|
| By the 10th of the following month | PAYE remitted to the relevant State Internal Revenue Service |
| By the 7th | Pension contributions remitted to the employee's Pension Fund Administrator |
| Monthly | NSITF contribution |
| By 31 January | Employer annual PAYE return, Form H1 |
| By 31 March | ITF annual contribution and return |
PAYE is administered by the State Internal Revenue Service where the employee works, not federally — so a business with staff in Lagos and Abuja files with two different authorities. Late remittance attracts interest and penalty assessed by the state office. PenCom applies a 2% monthly penalty on unpaid pension, compounding until settled, and has published non-compliant employer lists since 2023.
These are the errors that turn up most often when a manual payroll is reviewed.
Our ROI calculator prices what manual payroll actually costs — the days lost at month-end, the leave nobody recorded, and the statutory penalty exposure you are already carrying.
Open the ROI calculatorEffective 1 January 2026, the Act abolished the Consolidated Relief Allowance, introduced a rent relief of 20% of annual rent capped at NGN 500,000, and replaced the old 7% to 24% bands with six bands running from 0% on the first NGN 800,000 to 25% above NGN 50 million.
Not under the new Act. Employees earning NGN 800,000 a year or less — roughly NGN 66,667 a month — pay zero PAYE. The old 1% minimum tax rule has been abolished.
Basic salary plus housing allowance plus transport allowance. Pension is 8% from the employee and 10% from the employer on that base, not on total gross.
To the State Internal Revenue Service of the state where the employee works — the Lagos IRS for Lagos-based staff, the FCT IRS for Abuja. It is not a federal remittance.
Both are employer-only. NSITF is 1% of monthly payroll. ITF is 1% of annual payroll and applies at five or more employees or NGN 50 million turnover, with up to half reclaimable against approved training.
Under the NTA, NHF is voluntary for private-sector employees. Public-sector employees remain mandatory contributors.
CromaHR computes every deduction on this page automatically, with rates that are effective-dated — so a retrospective run uses the rates in force for that period rather than today's. Returns are generated in the formats the State Internal Revenue Service actually accepts, and every run leaves a complete audit trail.
Because the platform was designed by a Certified Internal Auditor, the controls came first: maker-checker approval on payroll runs, role-based permissions, and a record of every change showing who made it, when, and what the value was before and after.
CromaHR supports payroll in 36+ countries. These guides cover the markets our customers ask about most.
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