Nigeria Payroll & PAYE — Frequently Asked Questions (NTA 2025/2026)

These are the questions we hear most from employees, HR teams, and firms running Nigerian payroll — answered against the Nigeria Tax Act 2025/2026 as it applies from January 2026. Where a question deserves more than a paragraph, each answer links to the full guide or a calculator that shows the arithmetic live.

Pay basics

What is gross pay in Nigeria payroll?

Gross pay is total earnings before any deduction: basic salary plus housing, transport, and other taxable allowances. It is the figure an offer letter states and the starting point for every payroll computation.

What is net pay?

Net pay is what actually lands in the employee's account after PAYE, pension, NHF (where the employee has opted in), and any other deductions are taken from gross pay. You can see the split for any salary on our PAYE & net salary calculator.

PAYE & reliefs

How is PAYE calculated under the Nigeria Tax Act 2026?

Annually first, then monthly: take gross annual income, subtract statutory reliefs (pension at 8% of basic, housing and transport; NHF at 2.5% of basic where opted in; rent relief at the lower of 20% of annual rent or ₦500,000), apply the progressive bands — the first ₦800,000 at 0%, then 15%, 18%, 21%, 23%, and 25% on the slices above — and divide the annual tax by twelve. Our Nigeria Tax Act 2026 guide walks through every change.

Is the first ₦800,000 of income really tax-free?

Yes. Under the Nigeria Tax Act 2026 the first ₦800,000 of annual chargeable income is taxed at 0%, so an employee whose chargeable income falls entirely inside that band pays no PAYE. Separately, employees earning the national minimum wage or below are exempt from PAYE altogether.

What is rent relief and how do I claim it?

Rent relief is a deduction of the lower of 20% of your annual rent or ₦500,000, introduced by the NTA 2026 to replace the Consolidated Relief Allowance. To claim it through payroll, give your employer verifiable documentation — a tenancy agreement or rent receipts — so the relief can be applied before your PAYE is computed.

Is NHF still mandatory?

For private-sector employees, NHF is voluntary. Where an employee opts in, the deduction is 2.5% of basic salary; where they have not, deducting it is an unlawful deduction.

How do I calculate gross salary from a desired net?

There is no flat multiplier: PAYE is progressive and pension and NHF scale with the package, so the gross has to be solved for. Our net-to-gross calculator finds the gross salary whose deductions leave exactly the net you want, to the kobo.

Statutory deductions & employer duties

What statutory deductions come out of an employee's salary?

PAYE under the NTA 2026 bands, a pension contribution of 8% of basic, housing and transport, NHF at 2.5% of basic where the employee has opted in, and an NHIA share where the health scheme deducts one. Everything else — employer pension, NSITF, ITF — is paid by the employer and never appears on the payslip; the statutory deductions reference lists every line.

What does an employer pay on top of gross salary?

At minimum: pension at 10% of the employee's basic, housing and transport, NSITF at 1% of total monthly payroll, an ITF accrual of 1% of annual payroll for employers with 5 or more staff or turnover of ₦50 million and above, and an NHIA employer share, commonly 10% of basic. On a typical package these add a double-digit percentage on top of gross — the employer cost calculator computes the exact figure.

When must PAYE be remitted, and to whom?

By the 10th day of the month following payment, to the State Internal Revenue Service of the state where each employee resides — not where the company is registered. An employer with staff in three states remits to three different tax authorities.

What changed between PITA and the NTA 2026?

The Consolidated Relief Allowance was abolished and replaced by a capped rent relief; the bands changed from a 7%–24% ladder to 0%, 15%, 18%, 21%, 23% and 25% with the first ₦800,000 tax-free; the 1% minimum tax was abolished; and NHF became voluntary for private-sector employees. See the full PITA-to-NTA comparison in the Nigeria Tax Act 2026 guide.

Why do payroll figures need to be correct "to the kobo"?

Because PAYE is defined on annual income, monthly-rate shortcuts drift at every band boundary, and small errors compound into a discrepancy between what was deducted and what should have been filed — which the Nigeria Revenue Service now surfaces with data analytics. KoboHR computes every figure annually first and carries full precision; that is what payroll software for Nigeria being correct to the kobo means.