PAYE (Pay As You Earn) is the system where your employer deducts your personal income tax from your salary each month and pays it to the state tax authority on your behalf.
Instead of workers filing and paying income tax themselves, the employer does the maths, takes the tax out before salary lands, and remits it to the tax office of the state where each employee lives, by the 10th of the following month.
Since January 2026, PAYE in Nigeria follows the Nigeria Tax Act 2025 bands. After deductions (like your 8% pension and rent relief), the first ₦800,000 of your annual income is tax-free. Anything above that is taxed in bands from 15% up to 25%. Anyone earning ₦800,000 a year or less after deductions pays no income tax at all.
Nigerian example: Chidinma earns ₦300,000 a month at a Lagos logistics company. Her employer deducts her PAYE, about ₦28,580 a month once her pension and declared rent are factored in, and remits it to LIRS. She never has to visit a tax office; her payslip shows the deduction.
If your business has even one employee, you're expected to register for PAYE with your state's tax authority and remit monthly. Late remittance attracts penalties.
Work out any salary with the free PAYE calculator, see the full walkthrough in how to calculate PAYE in Nigeria, or get the bigger picture in statutory deductions in Nigeria.