A gross salary of ₦500,000 a month (₦6,000,000 a year) gives a take-home pay of about ₦397,980 a month after PAYE tax and pension, under the Nigeria Tax Act 2025 rules that apply from 2026.
Monthly and yearly breakdown
| Item | Per month | Per year |
|---|---|---|
| Gross pay | ₦500,000 | ₦6,000,000 |
| Pension (8% of basic, housing and transport) | −₦36,000 | −₦432,000 |
| PAYE tax | −₦66,020 | −₦792,240 |
| Take-home pay | ₦397,980 | ₦4,775,760 |
How the tax on ₦500,000 a month is worked out
Taxable income is your yearly gross pay of ₦6,000,000 minus pension of ₦432,000, which leaves ₦5,568,000. Each slice of that amount is taxed at the rate of its band:
| Taxable income band | Rate | Amount in band | Tax |
|---|---|---|---|
| ₦0 to ₦800,000 | 0% | ₦800,000 | ₦0 |
| ₦800,000 to ₦3,000,000 | 15% | ₦2,200,000 | ₦330,000 |
| ₦3,000,000 to ₦12,000,000 | 18% | ₦2,568,000 | ₦462,240 |
| Total | ₦5,568,000 | ₦792,240 |
Your top band is 18%. Only the part of your income inside that band is taxed at that rate, not your whole salary.
What changes this figure
- A raise. An extra ₦10,000 a month would add about ₦7,610 to your monthly take-home pay once tax and pension are taken off.
- Where tax starts. With the usual 8% pension, PAYE starts once gross pay passes about ₦71,840 a month.
- Rent relief. If you pay ₦600,000 a year in rent, you can deduct 20% of it (₦120,000) before tax, which raises monthly take-home pay by about ₦1,800.
- NHF. If your employer also deducts the National Housing Fund contribution (2.5% of basic pay), take-home pay falls by about ₦5,125 a month.
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Frequently asked questions
How much tax do I pay on ₦500,000 a month in Nigeria?
About ₦66,020 a month in PAYE (₦792,240 a year), which is an effective rate of 13.2% of gross pay.
What is the take-home pay for ₦500,000 a month?
About ₦397,980 a month (₦4,775,760 a year) after pension and PAYE tax, using a 50/25/15 pay split.
Is ₦500,000 a month above the tax-free threshold?
Yes. After pension, taxable income of ₦5,568,000 is above the ₦800,000 yearly tax-free amount, so part of it is taxed.
Does this include rent relief or NHF?
No. The figures show pension only. Rent relief (20% of yearly rent, up to ₦500,000) lowers tax, and NHF lowers take-home pay. Add both in the PAYE calculator.
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