Cost of an employee in Nigeria (2026)
What an employee really costs an employer in Nigeria: gross salary plus mandatory employer social contributions.
On a gross salary of NGN 800,000 per month in Nigeria, an employer pays about NGN 896,000 in total once mandatory employer social contributions of 12% on top of the gross are included.
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How salary is taxed in Nigeria
Income tax in Nigeria is progressive: marginal rates rise from 15% to 25% as income grows.
Employees also pay social contributions of around 8% of gross salary.
A tax-free allowance of about NGN 800,000 per year is deducted before income tax.
The standard VAT rate is 7.5%.
| Annual taxable income | Tax rate |
|---|---|
| Up to NGN 800,000 | 0% |
| Up to NGN 3,000,000 | 15% |
| Up to NGN 12,000,000 | 18% |
| Up to NGN 25,000,000 | 21% |
| Up to NGN 50,000,000 | 23% |
| NGN 50,000,000 and above | 25% |
Frequently asked questions
What does it cost to employ someone in Nigeria?
On top of the gross salary, an employer in Nigeria pays mandatory social contributions. The total cost of employment is the gross salary plus those employer contributions.
Are employer contributions the same as salary deductions?
No. Employer contributions are paid by the company in addition to the gross salary, while employee deductions (income tax and social contributions) are taken out of the gross to leave the net take-home pay.
Employer-contribution rates are approximate and may be capped or vary by region and sector.
Approximate 2026 estimate. Simplified model, verify before relying on it. Not tax advice.
Rates updated June 2026