Statutory payroll deductions in Nigeria

Every Nigerian payroll carries the same five statutory items: PAYE, pension, the National Housing Fund (NHF), the Nigeria Social Insurance Trust Fund (NSITF) and the Industrial Training Fund (ITF). Some come out of the employee’s pay, some are paid by the employer on top, and each has its own base, rate and deadline. This page puts them side by side and links to a full guide on each one.

The statutory items on a Nigerian payroll

Rates and deadlines that apply from 1 January 2026.

PAYEIncome tax2026 bands, paid to the state of residence by the 10th

8%Employee pensionOf basic, housing and transport, deducted from pay

10%Employer pensionOf the same base, paid with the 8% within 7 days

2.5%NHFOf basic salary, deducted and remitted within one month

1%NSITFOf monthly payroll, paid by the employer

1%ITFOf annual payroll, due by 1 April, employers with 5+ staff or ₦50m turnover

Deductions from pay and employer costs

The first question for any item is who bears it. Getting this wrong causes the most common payroll complaint: staff seeing a deduction on their payslip that the law places on the employer.

Item	Who pays	Rate	Worked out on	Deadline	Paid to
PAYE	Employee (deducted)	0% to 25% bands	Taxable income	10th of the following month	State tax authority where the employee lives
Employee pension	Employee (deducted)	At least 8%	Basic, housing and transport	Within 7 days of paying salaries	Employee’s Pension Fund Administrator
Employer pension	Employer	At least 10%	Basic, housing and transport	With the employee’s 8%	Employee’s Pension Fund Administrator
NHF	Employee (deducted)	2.5%	Basic salary	Within one month of the deduction	Federal Mortgage Bank of Nigeria
NSITF	Employer	1%	Total monthly payroll	Monthly	NSITF
ITF	Employer	1%	Total annual payroll	By 1 April for the previous year	Industrial Training Fund

What it adds up to on one salary

The chart shows each statutory item on a ₦500,000 monthly salary with the usual split of 50% basic, 25% housing and 15% transport, for an employee who contributes to NHF. Hover over a bar to see the amount.

Statutory items on a ₦500,000 monthly salary

Employee who contributes to NHF. ITF is shown as a monthly equivalent; it is paid once a year.

₦64,895PAYE

₦36,000Employee pension

₦6,250NHF

₦45,000Employer pension

₦5,000NSITF

₦5,000ITF

Show the numbers

Item	Value
PAYE Deducted from pay	₦64,895
Employee pension 8%, deducted from pay	₦36,000
NHF 2.5% of basic, deducted from pay	₦6,250
Employer pension 10%, employer cost	₦45,000
NSITF 1% of payroll, employer cost	₦5,000
ITF 1% monthly equivalent, employer cost paid yearly	₦5,000

Source: Workstat calculation using the Nigeria Tax Act 2025 bands and the statutory rates above.

In numbers:

	Amount
Gross pay	₦500,000
Employee deductions: PAYE, pension and NHF	₦107,145
Net pay	₦392,855
Employer costs: pension, NSITF and ITF	₦55,000
Total cost to the employer	₦555,000

Without NHF, PAYE is ₦66,020 and net pay is ₦397,980. NHF is a deduction, but it also lowers taxable income, so PAYE falls by ₦1,125 a month.

The order payroll works them out

The order matters, because pension and NHF are deducted before tax is calculated.

Working out statutory items each month

1. Split gross pay

   Separate basic, housing, transport and other allowances.

2. Pension

   8% employee and 10% employer, on basic, housing and transport.

3. NHF

   2.5% of basic salary for contributing employees.

4. PAYE

   Annual gross minus pension, NHF and other reliefs, through the 2026 bands, divided by 12.

5. Employer items

   NSITF at 1% of the month’s payroll; set aside 1% for the annual ITF levy.

Our guide on how to calculate PAYE works through the tax step with four examples.

Each item in brief

PAYE

Income tax on employment income, deducted every month under the Nigeria Tax Act 2025 and paid to the tax authority of the state where the employee lives. Minimum wage earners are exempt. See the PAYE calculator and what changed in 2026.

Pension

The Contributory Pension Scheme under the Pension Reform Act 2014: at least 10% from the employer and 8% from the employee, paid to each employee’s Pension Fund Administrator. Employers with 15 or more staff must take part. See pension contribution in Nigeria.

National Housing Fund

2.5% of basic salary under the NHF Act, deducted from Nigerian workers and remitted to the Federal Mortgage Bank of Nigeria. See NHF deduction in Nigeria.

NSITF

The employer’s 1% contribution to the Employees’ Compensation Scheme, which compensates staff for work-related injury, disease and death. See NSITF contribution.

ITF

The Industrial Training Fund levy of 1% of annual payroll, for employers with 5 or more staff or turnover of ₦50 million or more. Up to half can be refunded if you train staff under the Fund’s schemes. See ITF contribution.

Records to keep

For every item, keep the schedule showing each employee’s figure, the payment evidence and any receipt or certificate issued. Auditors, tax authorities and pension inspectors ask for these, and they are also what employees need when a contribution is missing from their account.

Statutory payroll checklist

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Every month

• PAYE remitted to each state by the 10th
• Pension remitted within 7 days of paying salaries
• NHF remitted within one month of the deduction
• NSITF contribution paid on the month’s payroll

Every year

• Employer PAYE annual return filed by 31 January
• NSITF payroll statement submitted
• ITF levy paid by 1 April, with the annual return

When something changes

• New starter set up with tax ID, RSA PIN and NHF number
• Leaver’s final contributions paid and recorded

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For the whole monthly and annual cycle in one place, see the complete payroll guide. The free payroll template calculates every item above.