AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Gross salary is the total your employer agrees to pay; net is what reaches your account after deductions. In Nigeria the statutory ones are PAYE income tax and, where the Pension Reform Act 2014 applies, at least 8% employee pension; NHF is compulsory for public-sector staff but voluntary in the private sector. On a ₦500,000 monthly gross, our worked example leaves about ₦404,860.
Job offers in Nigeria are often quoted as an annual gross figure, sometimes as a monthly one, and sometimes as a "package" that mixes salary with benefits. Before you compare two offers, convert each to the same thing: what lands in your account each month. That needs two pieces of information from the employer, the breakdown of the gross figure and the list of deductions they will make.
Statutory deductions: what the law requires
- PAYE income tax
- Deducted by your employer and paid to your state tax authority. From 2026 it follows the Nigeria Tax Act 2025 bands: per BusinessDay, the first ₦800,000 of taxable income at 0%, the next ₦2.2 million at 15%, the next ₦9 million at 18%, the next ₦13 million at 21%, the next ₦25 million at 23%, and 25% above ₦50 million.
- Pension (employee share)
- At least 8% of monthly emoluments, with the employer adding at least 10%, under the Pension Reform Act 2014 as summarised by KPMG. Emoluments for this purpose are not less than basic, housing and transport combined. PenCom's own framework page says the Act covers private organisations with three or more employees.
- National Housing Fund
- Templars' note on the 2022 amendment says contribution is now compulsory only for public-sector employees earning the national minimum wage or more, and for the self-employed. Private-sector employees may contribute voluntarily at 2.5% of monthly income.
Two things that are not deductions from you: NSITF's Employees' Compensation Scheme is 1% of total monthly payroll paid by the employer, and the ₦50 stamp duty on electronic transfers does not apply to salary payments, according to the bank notices reported by Techeconomy when the charge replaced EMTL on 1 January 2026.
Optional or contractual deductions
- Health cover: an employer may enrol you in an NHIA formal-sector plan or a private HMO plan. NHIA's FAQ describes employer and employee shares but the figures on the page do not reconcile, so ask your employer what, if anything, comes out of your pay.
- Voluntary pension contributions above the 8%.
- Voluntary NHF contributions in the private sector.
- Cooperative savings, union dues and staff welfare funds.
- Loan repayments and salary advances deducted under an agreement you signed.
Worked example: ₦500,000 a month gross
Example only. An offer of ₦6 million a year, paid as ₦500,000 a month, broken down as basic ₦200,000, housing ₦125,000, transport ₦75,000 and other allowances ₦100,000. You pay rent of ₦1.2 million a year. Rent relief under the Act is 20% of annual rent, capped at ₦500,000 (per BusinessDay), so ₦240,000.
| Step | Per year | Per month |
|---|---|---|
| Gross | ₦6,000,000 | ₦500,000 |
| Pension base (basic + housing + transport) | ₦4,800,000 | ₦400,000 |
| Employee pension, 8% of base | ₦384,000 | ₦32,000 |
| Rent relief (reduces taxable income only) | ₦240,000 | |
| Taxable income: 6,000,000 − 384,000 − 240,000 | ₦5,376,000 | |
| Tax: 0% on first ₦800,000 | ₦0 | |
| Tax: 15% on next ₦2,200,000 | ₦330,000 | |
| Tax: 18% on remaining ₦2,376,000 | ₦427,680 | |
| Total PAYE | ₦757,680 | ₦63,140 |
| Net pay (gross − pension − PAYE) | ₦4,858,320 | ₦404,860 |
If you also opt into NHF at 2.5% of ₦500,000, that is ₦12,500 a month, taking net to ₦392,360. The employer's 10% pension contribution (₦40,000 a month on this base) goes into your retirement savings account on top; it is part of your cost to the employer but not part of your gross salary unless the offer says so.
Annual, monthly and "package" offers
Convert every offer to monthly gross first. An annual figure divided by 12 gives the monthly gross only if there is no thirteenth month or fixed bonus folded in; if there is, divide the salary part by 12 and treat the bonus separately. A "package" that includes a car, housing or school fees is worth less to you in cash terms than the same amount paid as salary, and some benefits in kind can still be taxable. Ask the employer to separate cash pay from benefits in the offer letter.
How the breakdown changes your net
Two offers with the same gross can produce different take-home pay. If the employer classes more of the package as basic, housing and transport, the pension base is larger, so more goes to your RSA and less to your pocket now; the trade is retirement savings, not a loss. A bigger rent relief claim lowers your tax. Bonuses are taxable employment income too; ask payroll how PAYE on them is handled, because it can make one month's deduction look high.
What to check first
- Ask for the gross split into basic, housing, transport and other allowances, in writing.
- Ask which deductions the employer will make and on what base.
- Confirm the pension administrator and that remittances will appear on your RSA statement.
- Ask how to claim rent relief and what evidence payroll needs.
- Run the numbers on our PAYE bands guide before you accept.
Where Pryme fits
Once you know your real net, build your budget on that number, not the gross. Our salary budgeting guide shows how, and a Naira Savings Box lets you move a fixed amount on payday. Employers running payroll can see how Pryme payroll lays out each line before approval.
Questions people ask
What is the difference between gross and net salary in Nigeria?
Gross is the full salary agreed; net is what you receive after PAYE, pension and any other deductions.
Is NHF deduction compulsory for private sector workers?
According to Templars' note on the 2022 amendment, no: it is compulsory for public-sector employees at or above the minimum wage and for the self-employed, and voluntary for private-sector employees.
How much is deducted for pension from salary in Nigeria?
At least 8% of monthly emoluments from the employee, with at least 10% from the employer, on a base not less than basic, housing and transport.
How do I calculate my take-home pay from my gross salary?
Deduct pension, subtract pension and rent relief from gross to get taxable income, apply the Nigeria Tax Act 2025 bands, then subtract the tax and any other deductions. The worked example above shows each step.
Sources
- BusinessDay: Nigeria Tax Act 2025 personal income tax bands explained (12 Jan 2026) · accessed Oct 2026
- KPMG Nigeria: summary of the Pension Reform Act 2014 (Jul 2014) · accessed Oct 2026
- PenCom: Framework for Micro Pension Plan · accessed Oct 2026
- Templars: Amendment of the National Housing Fund Act and contribution into the NHF (Apr 2023) · accessed Oct 2026
- NSITF: Services (Employees' Compensation Scheme) · accessed Oct 2026
- Techeconomy: Stamp duty replaces EMTL, sender to bear N50 charge on bank transfers (1 Jan 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.