Salary After Tax Calculator

What this calculator does

The number on your offer letter and the number that lands in your account are two different figures, and the gap between them surprises people every January. From 1 January 2026 the gap changed shape entirely, because the Nigeria Tax Act 2025 abolished the Consolidated Relief Allowance that had shaped Nigerian payroll for more than a decade and replaced it with a flat tax free band and a rent relief.

This calculator applies the current structure. Enter your gross salary, whether that figure is monthly or annual, the rent you pay, and your pension and housing fund rates, and it returns your estimated PAYE, your effective tax rate and your monthly take home pay. It also shows you exactly which income fell into which tax band, so you can see where the money actually went.

Two things worth saying plainly. First, this is an estimate for planning and comparison, not a tax computation. Second, the rent relief is a genuine change worth paying attention to: if you are a tenant with a formal tenancy agreement, entering your annual rent can move your result meaningfully.

How the calculation works

Nigerian PAYE is progressive, which means different slices of your income are taxed at different rates rather than your whole salary being taxed at one rate. The common misunderstanding is that crossing into a higher band taxes everything at the higher rate. It does not. Only the portion above the threshold is taxed at the higher rate.

The calculation runs in three stages. First, your annual gross is established. Second, reliefs and deductions are subtracted to arrive at chargeable income. These are your pension contribution, your National Housing Fund contribution where it applies, your rent relief, and any other deductible reliefs such as life assurance premiums or NHIS contributions. Third, the tax bands are applied to whatever chargeable income remains.

Take home pay is then your gross minus pension, minus the housing fund, minus the tax. Pension and NHF reduce your take home even though they also reduce your tax, which is why increasing your pension contribution lowers your tax bill and your immediate cash at the same time.

The formula

Chargeable income = Annual gross − Pension − NHF − Rent relief − Other reliefs

Rent relief = the lower of (20% of annual rent) or ₦500,000

Tax bands from 1 January 2026: First ₦800,000 at 0% · Next ₦2,200,000 at 15% · Next ₦9,000,000 at 18% · Next ₦13,000,000 at 21% · Next ₦25,000,000 at 23% · Above ₦50,000,000 at 25%

Take home = Annual gross − Pension − NHF − PAYE

A worked example

Consider someone on ₦450,000 a month, which is ₦5,400,000 a year, paying ₦1,200,000 a year in rent and contributing the statutory 8 per cent to pension with no housing fund deduction.

Pension takes ₦432,000. Rent relief is 20 per cent of ₦1,200,000, which is ₦240,000, comfortably under the ₦500,000 cap. Chargeable income is therefore ₦5,400,000 minus ₦432,000 minus ₦240,000, which is ₦4,728,000.

The first ₦800,000 is taxed at nothing. The next ₦2,200,000 is taxed at 15 per cent, giving ₦330,000. The remaining ₦1,728,000 falls in the 18 per cent band, giving ₦311,040. Total annual PAYE is ₦641,040, or about ₦53,420 a month. Take home works out at roughly ₦372,250 a month, and the effective tax rate is 11.9 per cent of gross, well below the 18 per cent top band the salary touches.

Things worth knowing

Rent relief only helps tenants

The relief is worth up to ₦500,000 off your chargeable income, which at the 18 per cent band is ₦90,000 a year in tax. You need a genuine tenancy agreement and receipts. Homeowners and people living rent free with family do not qualify, and the only personal shelter they have is the tax free first ₦800,000.

Pension cuts tax and cash together

Every naira you put into pension is a naira that never reaches the tax bands, but it is also a naira that does not reach your account this month. Contributing above the statutory 8 per cent is a savings decision with a tax benefit attached, not a way to increase take home pay.

Your band is not your rate

Someone whose income touches the 21 per cent band does not pay 21 per cent on everything. The effective rate shown by this calculator is the figure that actually matters for budgeting, and it is always lower than the top band you reach.

Salary structure changes the answer

Pension and housing fund contributions are legally based on basic, housing and transport allowances rather than total gross. Because employers split those components differently, two people on identical gross salaries can take home different amounts. This calculator uses gross as the basis, which is close enough for planning but not identical to your payslip.

Common mistakes to avoid

Applying the old Consolidated Relief Allowance, which was abolished from January 2026.
Entering monthly rent when the field asks for annual rent, which understates the relief by a factor of twelve.
Assuming the whole salary is taxed at the top band reached.
Forgetting that pension and NHF reduce take home pay as well as tax.
Treating the estimate as a filed tax computation rather than a planning figure.
Comparing two job offers on gross alone when one includes a housing allowance and the other does not.

Frequently asked questions

What is the tax free threshold in Nigeria now?

The first ₦800,000 of chargeable income is taxed at zero per cent under the Nigeria Tax Act 2025, which took effect on 1 January 2026. Because reliefs are subtracted before the bands apply, many people earning meaningfully more than ₦800,000 a year still pay little or no PAYE.

What happened to the Consolidated Relief Allowance?

It was abolished from January 2026. Under the old rules it was the higher of ₦200,000 or 1 per cent of gross income, plus 20 per cent of gross income. It has been replaced by the ₦800,000 tax free band and the rent relief. Lower and middle income earners generally keep slightly more under the new structure, while higher earners usually pay more, because the old 20 per cent of gross component grew with salary.

How much rent relief can I claim?

Twenty per cent of your annual rent, capped at ₦500,000. You need to be an actual tenant with supporting documentation. The cap is reached at an annual rent of ₦2,500,000.

Is pension contribution compulsory?

Under the Pension Reform Act, employees in organisations above a defined size contribute a minimum of 8 per cent while the employer contributes at least 10 per cent. Smaller employers and some categories of worker fall outside the mandatory scheme, so set the rate to zero if it does not apply to you.

Does this calculator work for freelancers?

It gives a reasonable estimate of the tax on self employment income, and the same bands and reliefs apply. However, self assessment has its own rules around allowable business expenses and filing deadlines, and Nigerian residents are now taxed on worldwide income. If you earn from foreign clients, speak to a tax adviser rather than relying on a calculator.

Why does my payslip show a different figure?

The three usual reasons are the split between basic and allowances in your salary structure, state level administration by your local internal revenue service, and benefits in kind that are taxable but do not appear as cash. Take the estimate to your payroll department and ask them to walk you through the difference.