A more progressive system
Under the Nigeria Tax Act 2025, PAYE is progressive. The first ₦800,000 of taxable income is tax-free; then income is taxed in slices at 15%, 18%, 21%, 23% and 25%. Only the income within each band is taxed at that band's rate.
Pension (8%) and rent relief are deducted before the bands apply, so your taxable income is lower than your gross.
Common questions
From 2026: 0% on the first ₦800,000, then 15%, 18%, 21%, 23% and 25% on higher slices. Only the income within each band is taxed at that rate.
Once your taxable income (after pension and reliefs) passes ₦800,000 a year. Below that, no PAYE is due.
Your marginal rate is the band your last naira falls into (up to 25%). Your effective rate is total tax over total income — always lower.