PAYE (Pay-As-You-Earn)
PAYE is the system Nigerian employers use to deduct Personal Income Tax from salaries at source and remit it monthly to the State Internal Revenue Service. It is not a separate tax: it is the collection method for PIT on employment income.
Who it applies to
Every employee earning above the national minimum wage of ₦70,000 a month (₦840,000 a year). Your employer calculates the deduction, takes it from your gross pay, and remits it by the 10th of the following month.
Worked example
On a gross salary of ₦500,000 a month (₦6,000,000 a year), PAYE under the 2026 bands is ₦72,500 a month, leaving ₦427,500 take-home, an effective rate of 14.5%. See the full band-by-band breakdown.
Current position
PAYE is governed by the Personal Income Tax Act, with the band structure updated by the Nigeria Tax Act for 2026: 0% on the first ₦800,000 of taxable income, rising to 25% above ₦50,000,000.
Self-employed people do not pay through PAYE. They file under direct assessment instead, covered in the freelancer tax guide.
More Nigerian tax terms
- Company Income Tax (CIT)
- Consolidated Relief Allowance (CRA)
- Development Levy
- Direct assessment
- FIRS (Federal Inland Revenue Service)
- Input VAT
- Minimum wage tax exemption
- Output VAT
- Personal Income Tax (PIT)
- Rent relief
- Tax Clearance Certificate (TCC)
- Tax Identification Number (TIN)
- Value Added Tax (VAT)
- Withholding Tax (WHT)
Tax that works itself out
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