How to run Nigerian payroll in 2026 — step by step
Gross pay to PAYE, 8% pension, NHF, payslips and a signed approval sheet — shown with real screenshots from a live payroll run, not stock images. Follow it with a spreadsheet if you like; every screen you see here is one click in Talento.
Applied to annual taxable income, after pension and allowable relief.
Annual slice
Rate
First ₦800,000
0%
Next ₦2,200,000
15%
Next ₦9,000,000
18%
Next ₦13,000,000
21%
Next ₦25,000,000
23%
Everything above ₦50,000,000
25%
Worked example: ₦500,000 a month
A staff member on ₦6,000,000 a year, contributing pension, with no rent claim.
Annual gross pay
₦6,000,000
₦500,000 a month — basic, housing, transport and allowances added together.
Less employee pension (8%)
− ₦480,000
8% of pensionable pay. Skip this line for staff you have marked pension-exempt.
Taxable income
₦5,520,000
There is no Consolidated Relief Allowance in 2026. Rent relief (20% of rent, capped at ₦500,000) and life assurance premiums come off here if the staff member declares them.
PAYE on the bands
₦783,600
₦800,000 at 0% = ₦0 · ₦2,200,000 at 15% = ₦330,000 · remaining ₦2,520,000 at 18% = ₦453,600.
Monthly PAYE
₦65,300
Annual tax divided by 12.
Monthly net pay
₦394,700
₦500,000 gross − ₦40,000 pension − ₦65,300 PAYE. NHF and loan repayments come off after this if they apply.
Before your first run, open Payroll → Configuration. The 2026 PAYE bands are fixed by law, so they are locked; what you set here is pension, the default forex rate for staff paid in dollars, and whether a run must be approved before it is finalised.
Turn on "Require approval before finalising" if payroll and finance are two different people.
Working outside Nigeria? Settings → Tax Profiles has Ghana, Kenya and South Africa presets.
Payroll → Configuration: pension rates, forex default and the locked 2026 PAYE bands.
2
Enter each staff member's annual salary structure
Nigerian payslips are built from components — basic, housing, transport, leave allowance, medical, meal, benefits in kind. Enter them once as annual figures and the app divides by 12 every month, so you are never rebuilding a spreadsheet.
Monthly gross, monthly PAYE and estimated net are shown per staff member before you run anything.
Mark pension-exempt staff (e.g. expatriate directors) so pension is skipped for them only.
The duplicate check blocks the same staff member being entered twice.
One salary structure per staff member — gross to PAYE to net, visible before the run.
3
Generate the month's run
Pick the year and month, enter the forex rate for dollar-paid staff, and press Generate. Every active staff member is pulled in, PAYE and pension are worked out on the 2026 rules, and loan or salary-advance instalments due this month are deducted automatically.
Totals across the top: gross, pension, PAYE, loans and net pay for the whole company.
Add overtime or one-off deductions per row while the run is still a Draft.
Permanent and contract/outsourced staff are grouped separately for compliance records.
A draft August 2026 run: 12 staff, ₦48.9m gross, ₦10.9m PAYE, ₦37.3m net.
4
Print or email the payslips
Each row prints a payslip that shows payments on the left, deductions on the right and net pay in the middle — PAYE, 8% pension, NHF, other deductions and any staff loan, all itemised so staff can see how the figure was reached.
Payslip reference, date issued, grade/step, location and PFA are on every slip.
Print, save as PDF, or email the slip straight to the staff member.
Naira and dollar versions of the same slip for expatriate staff.
A payslip generated from the same run — payments, deductions and net pay.
5
Send the approval sheet for signature
Before money leaves the account, print the payroll approval sheet: one landscape page with every staff member, the company totals, a notes box for conditions of approval, and three signature blocks for HR/payroll, finance and the MD/CEO.
Marked DRAFT until it is finalised, so an unsigned sheet can never be mistaken for the final one.
Permanent and contract subtotals shown separately for the board.
Reference number on the sheet matches the payslips from the same run.
The approval sheet management signs before payment is released.
6
Finalise, then keep the trail
Finalise & save locks the run into history. From there you can reprint any month's payslips, produce multi-month payslip bundles for a single staff member, and issue payroll certificates, tax letters, pension letters and loan-completion letters from the same figures.
Month-on-month history per staff member for loan, visa and mortgage requests.
Payroll cost, PAYE and pension reports for the board and for remittance.
Everything stays on your laptop — no salary data is uploaded anywhere.
Saved runs stay available for reprints, letters and board reports.
Nigerian payroll questions
How is PAYE calculated in Nigeria in 2026?
Add up annual gross pay, take off the 8% employee pension contribution and any allowable relief (rent relief of 20% of declared rent capped at ₦500,000, and life assurance premiums). Apply the progressive bands to what is left: 0% on the first ₦800,000, then 15%, 18%, 21%, 23% and 25%. Divide the annual tax by 12 for the monthly deduction. The Consolidated Relief Allowance no longer exists.
What deductions must a Nigerian employer make from salary?
Employee pension at 8% of pensionable pay, PAYE on the bands above, and NHF at 2.5% of basic where it applies. The employer also pays 10% pension on top of salary. Staff loans, salary advances and cooperative deductions come off after statutory deductions.
Is overtime taxable and pensionable?
Overtime is taxable but not pensionable in Nigeria. Talento treats it that way automatically — overtime you type into a run adds to PAYE but not to the pension base.
How long does a monthly payroll run take in Talento?
Once salary structures are entered, a run is one click: choose the month, press Generate, review the rows, then print payslips and the approval sheet. For a 40-staff company that is usually under ten minutes, including the signature sheet.
Do I need internet to run payroll?
No. Talento installs on a Windows laptop and stores everything on that machine, so payroll still runs during a power or network outage and salary data never leaves your office.
Can I use it outside Nigeria?
Yes. Tax Profiles ship with Nigeria, Ghana, Kenya and South Africa presets, and you can clone a profile to set your own bands, pension rates and reliefs for another country.
This walkthrough explains how the software applies the 2026 rules. Confirm your own figures with your tax consultant or the relevant State Internal Revenue Service before remitting.
Run your next payroll this way
Try it free for 7 days on your own laptop, or tell us your staff count and we will confirm the right plan — Starter starts at ₦950,000, paid once.
