Nigeria operates a progressive tax system. This means your income is taxed in stages, not all at once.
A progressive tax system means that different portions of your income are taxed at different rates. As your income increases, only the excess falls into higher tax brackets — not your entire income.
Personal Income Tax in Nigeria is calculated annually and applies to income earned from salaries, wages, and self-employment.
The government uses a progressive tax system, meaning higher earners pay a higher rate — but only on the portion of income that exceeds lower bands.
Before tax rates are applied, a portion of your income may be exempt or tax-free, ensuring low-income earners are protected.
Under the revised tax law, the first ₦800,000 of annual income is completely tax-free.
This threshold replaces older allowance-based calculations and simplifies how tax is determined for individuals.
If your total annual income is ₦800,000 or less, you pay zero personal income tax.
If your annual taxable income is ₦3,000,000, it is split across brackets and taxed separately. The total tax is the sum of all bracket calculations.
This ensures fairness and prevents over-taxation.
While tax is calculated annually, most salary earners pay monthly through PAYE. Employers divide the annual tax into 12 equal payments.
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Tax rules may change. Always verify with FIRS or your State Internal Revenue Service.