President Bola Ahmed Tinubu, on June 26, signed into law four new tax bills. Among the key outcomes is a revised taxation system for Pay As You Earn (PAYE) — a change that directly impacts every salaried worker in Nigeria.
Under Nigeria’s 2026 tax reforms, PAYE remains the method for collecting Personal Income Tax (PIT) from salaries, but most low‑income earners are now exempt. The law introduces new tax bands from 15-25 percent, revised definitions of taxable income, and updated reliefs such as rent relief.
Employees are grappling with what these new laws mean for their take home and their overall financial planning.
Human Resource practitioners (HRs) across the country are also planning on how to approach the new laws
“We’ve actually taken a proactive approach. Over the past few months, we’ve held several company-wide sessions with industry professionals to help employees understand what these new reforms mean, both for their take-home pay and their overall financial planning. We’ve also run internal simulations to see how the new PAYE structure will affect our payroll and budgeting for next year. So, it’s safe to say we’re preparing well,” a Lagos-based HR generalist in an Oil company told BusinessDay.
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The implementation of the revised Pay As You Earn (PAYE) regulations necessitates immediate clarity. For all Nigerian employees, spanning both the public and private sectors, engagement with the Human Resources (HR) department is essential to ensure compliance and accurate compensation.
How will the new PAYE rates affect my monthly take-home?
Workers are advised to understand how the new changes will affect their net pay before deductions are made.
What benefits are now taxable under the new rules?
Certain benefits that were previously tax-exempt, such as housing and transport allowances, may now be subject to taxation. Employees are encouraged to seek clarification to avoid unexpected deductions.
Will these changes affect my pension or NHF deductions?
As PAYE interacts with other statutory deductions, understanding how pension and National Housing Fund (NHF) contributions are affected has become essential.
How does the company calculate my taxable income?
Understanding the breakdown of income, including basic salary, allowances, bonuses, and other earnings, helps ensure that only accurate items are included in tax calculations.
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What should I do if I notice a wrong deduction?
Errors may occur in tax deductions. Understand the procedure for reporting mistakes, making corrections, or requesting refunds in cases of PAYE over-deduction.
Where can I access my annual tax statement?
Employees are entitled to a record of their tax payments, which serves as a reference for personal tax filings, loan applications, and financial planning.
What’s the process if I change jobs mid-year?
To avoid double taxation, new employers are required to obtain records of an employee’s previous PAYE payments before making further deductions.
Are bonuses and commissions taxed differently now?
Some of the new reforms change the way performance-based pay is taxed, affecting calculations during bonus periods.
Will the new PAYE changes affect contract or freelance staff?
For employees who are not full-time, it is necessary to verify whether the new rates or reliefs apply under self-assessment rules.
How will the new PAYE rules affect employees with multiple income sources or side jobs?
Many Nigerians earn from multiple sources, including a main job, freelance work, or small businesses. HR must ensure accurate deductions to prevent double taxation, while employees are responsible for declaring any secondary income.
