Why Two Workers on ₦10m Can Pay Different PAYE in 2026

PAYE is calculated from taxable income, not simply from gross salary. Eligible deductions such as pension, NHF and documented rent relief can reduce taxable income before the tax bands are applied. That is why two employees on the same ₦10 million annual package may not have identical deductions. Tax bands are progressive. Entering the 18% band does not mean an entire salary is taxed at 18%; only the portion that falls within that band attracts the higher rate. For example, taxable income of ₦3.5 million would have the first ₦800,000 taxed at 0%, the next ₦2.2 million at 15%, and the remaining ₦500,000 at 18%. Rent relief is also not automatic. It is 20% of annual rent paid, capped at ₦500,000, and it requires proof of payment. Using an assumed ₦650,000 in pension and NHF deductions, a worker on ₦10 million gross income who qualifies for the full rent relief could pay about ₦1.383 million yearly PAYE, while a colleague without rent relief could pay about ₦1.473 million. That is roughly ₦7,500 more each month. The key questions are whether payroll started from taxable income, whether rent relief is properly documented, and whether the ₦800,000 zero-rate band is being confused with the ₦70,000 monthly minimum-wage PAYE exemption. Employees should check their payslips and seek qualified tax advice where records are unclear.

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