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The short answer
Salaries and allowances paid to pastors, imams and church staff are employment income and taxable under PAYE in the same way as any other salary; a church's own worship income is not taxed. A church with three or more employees must also run contributory pension (employee at least 8%, employer at least 10%) and should check its group life and NSITF obligations.
Many churches pay their pastors and staff without deducting tax, on the understanding that a church is tax-exempt. The church's worship income is not taxed, but that exemption does not travel to the people it pays. Taiwo Oyedele, chair of the Presidential Committee on Fiscal Policy and Tax Reforms, put it plainly in November 2025: pastors, imams and other religious workers must pay tax on salaries from religious institutions, under the same threshold as everyone else.
Who counts as an employee
Anyone paid a regular salary or stipend for working for the church, including resident pastors, administrators, musicians, cleaners, drivers and security, is an employee for tax purposes. The church, as employer, deducts PAYE from each payment and remits it to the state internal revenue service where the employee lives. Visiting ministers paid an occasional honorarium are a grey area; ask your state IRS how it treats them.
How PAYE works under the 2025 law
The Nigeria Tax Act 2025 took effect on 1 January 2026. According to DLA Piper Africa's August 2026 summary, the annual bands are:
| Annual taxable income | 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% |
| Above ₦50,000,000 | 25% |
Employees on the national minimum wage (₦70,000 a month) or less are exempt. Rent relief is 20% of rent paid, capped at ₦500,000, and contributions under the Pension Reform Act and to the National Housing Fund are deductible.
Worked example
Example: an assistant pastor earns ₦300,000 a month (₦3,600,000 a year), contributes 8% to pension and pays ₦1,200,000 a year in rent. This example ignores NHF and any benefits in kind.
| Step | ₦ a year |
|---|---|
| Gross salary | 3,600,000 |
| Less pension, 8% | −288,000 |
| Less rent relief, 20% of ₦1,200,000 | −240,000 |
| Taxable income | 3,072,000 |
| First ₦800,000 at 0% | 0 |
| Next ₦2,200,000 at 15% | 330,000 |
| Remaining ₦72,000 at 18% | 12,960 |
| Annual PAYE | 342,960 |
| Monthly deduction | 28,580 |
Allowances and benefits
A manse, a church car or a fuel allowance is part of the pastor's pay. The employer's annual return under section 14 of the Nigeria Tax Administration Act 2025 must show, for each employee, gross emoluments including allowances and benefits in kind. BusinessDay's January 2026 report notes that personal gifts to clergy may be assessed as income or benefits in kind if they are not clearly separated from church assets.
Deadlines
- Monthly PAYE: PwC's tax summary (May 2026) says remit by the 10th of the month after salaries are paid; the 2025 Act runs late-remittance penalties after the 21st. Pay by the 10th to be safe and confirm with your state IRS.
- Annual employer return: all emoluments for the previous year, by 31 January (NTAA 2025, s.14).
- Penalties: the Act sets a 40% penalty for failing to deduct, and 10% plus interest for deducting but not remitting.
Pension, group life and NSITF
PenCom applies the contributory pension scheme to private organisations with three or more employees. The minimum is 8% of monthly emoluments from the employee and 10% from the employer, remitted to each employee's pension fund administrator within seven working days of paying salary. In the example, the church would add ₦30,000 a month (10% of ₦300,000) on top of the ₦24,000 deducted from the pastor.
The Pension Reform Act 2014 also requires employers to keep group life insurance for employees, at least three times annual total emolument. Separately, the Employees' Compensation Act requires employers to contribute 1% of total monthly payroll to NSITF; NSITF's own page says cover runs from day one and includes contract and casual workers.
Our guides to PAYE bands for 2026, pension contribution rates and registering as an employer with your state IRS go into each step. For offerings, see church finance records.
If the church has never run PAYE
- Register the church as an employer with the state internal revenue service where staff live, and get the church's Tax ID.
- List every person paid, with gross monthly pay, allowances and benefits.
- Calculate PAYE for each, deduct it from pay, and remit it with a schedule each month.
- If the church has three or more staff, make sure each employee has a retirement savings account with a pension fund administrator of their choice, and remit both shares.
- File the annual return of emoluments by 31 January.
- Ask the state IRS how to regularise earlier years if PAYE was never deducted; penalties and interest may apply.
Where Pryme fits
Pryme Business Accounts come with a Finance agent that can prepare each month's payroll schedule, PAYE and pension figures for review. A person approves anything above the ceiling you set, and every action is recorded.
Questions people ask
Do pastors pay tax in Nigeria?
Yes. Salaries paid to pastors and other religious workers are taxable employment income under PAYE, with the same bands and reliefs as any other employee.
Is a church exempt from PAYE?
No. The church's own worship income is not taxed, but as an employer it must deduct and remit PAYE from salaries it pays.
Does a church have to pay pension for its staff?
Under PenCom's framework, organisations with three or more employees must run contributory pension: at least 8% from the employee and 10% from the employer.
Is the pastor's house allowance taxable?
Allowances and benefits in kind form part of emoluments and must be shown on the employer's annual return. Ask your state IRS how a manse or car is valued.
Sources
- Pastors, imams to be taxed on salaries: Oyedele, 21st Century Chronicle (25 Nov 2025) · accessed Oct 2026
- FAQs on payroll taxes and employer liability, DLA Piper Africa (28 Aug 2026) · accessed Oct 2026
- Framework for Micro Pension Plan, PenCom · accessed Oct 2026
- CPS: what you should know about employee's rights, ThisDay (20 Mar 2023) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- Nigeria individual tax administration, PwC Worldwide Tax Summaries (reviewed 29 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.