A typical Nigerian payslip carries more than one deduction. PAYE usually sits alongside a pension contribution, and sometimes other statutory or company deductions too.
Your pension contribution is at least 8% of monthly emoluments, and your employer pays at least 10% of monthly emoluments on top of your salary. Your share is deducted before PAYE is worked out, which is why pension matters for the tax line on your payslip.
What the pension rates are
Under the pension law, you pay at least 8% of monthly emoluments and your employer pays at least 10% of monthly emoluments. Your employer takes your share out of your pay each month and sends both amounts to your pension fund.
These are minimums. An employer and its staff can agree to pay more, so your own scheme may use a higher rate. Your payroll team or pension fund administrator can tell you what yours uses.
Other deductions sometimes seen alongside PAYE, such as a national housing contribution, are not given a rate in this guide.
How deductions generally relate to PAYE
Your pension contribution comes off your pay before PAYE is worked out, so PAYE is calculated on a smaller figure than your full salary. The PAYE calculator applies the employee rate by default for this reason.
Once pension is off, the bands themselves work exactly as described in the 2026 PAYE bands explained: whatever the final taxable figure is, the same band-by-band steps in how PAYE is calculated apply to it.
A simple way to think about it
Think of your pay in two stages. First, some deductions may come off the top. Then PAYE is worked out on what is left.
Not every deduction works this way. Some come off after tax, not before it. Others are optional, not statutory. That is exactly why this guide asks you to check, rather than guess, and why the answer can differ from one employer to the next.
What stays constant either way
Whatever other deductions apply, the PAYE bands and rates do not change. ₦800,000 is still the tax-free slice, and the same six bands still sit above it. Only the income figure the bands are applied to can move.
What to check on your own payslip
- Ask payroll which deductions apply to your pay before PAYE is calculated.
- Ask your pension fund administrator whether your scheme pays more than the legal minimum.
- Compare the PAYE line on your payslip against the PAYE calculator, using whatever figure your employer says PAYE is actually calculated on.
For everything else in this series, including rent relief, see the PAYE and state tax hub. A short conversation with payroll now saves confusion later, especially in the first few payslips after any deduction changes.