Understanding Your Payslip | TaxHQ

Reading Your Nigerian Payslip

Your payslip shows how your gross salary becomes your take-home pay. Here's what each deduction means:

Gross Salary Breakdown

Most Nigerian salaries are structured as:

Basic Salary: 50-60% of gross (used for pension, NHF calculations)
Housing Allowance: 15-25%
Transport Allowance: 10-15%
Other Allowances: Utilities, meals, leave allowance, etc.

Statutory Deductions

1. PAYE (Pay As You Earn)

This is your income tax, calculated on your taxable income after reliefs.

2026 Tax Brackets: Income BracketTax Rate -------------------------- First ₦800,0000% Next ₦2,000,00015% Next ₦2,400,00018% Next ₦5,000,00021% Next ₦30,000,00023% Above ₦40,200,00025%

2. Pension (8%)

Employee contribution: 8% of basic + housing + transport
Employer also contributes: 10% (you don't see this deducted)
Goes to your Retirement Savings Account (RSA)
Tax-deductible and grows tax-free

3. NHF (2.5%)

National Housing Fund contribution
2.5% of your basic salary
Helps you qualify for mortgage loans
Tax-deductible

4. NHIS (Optional)

National Health Insurance Scheme
Percentage varies by organization
Provides healthcare coverage
Tax-deductible

Example Payslip Breakdown

For a ₦500,000/month gross salary:

ItemAmount -------------- Gross Salary₦500,000 Basic (60%)₦300,000 Housing (20%)₦100,000 Transport (10%)₦50,000 Other (10%)₦50,000 Deductions Pension (8% of ₦450k)-₦36,000 NHF (2.5% of ₦300k)-₦7,500 PAYE-₦67,000 Net Salary₦389,500

Use our PIT Calculator to verify your PAYE deductions are correct.

Red Flags to Watch For

PAYE higher than expected (check if reliefs applied)
Pension not being remitted (verify with your PFA)
No tax receipt at year end
Deductions not matching your contract