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Part of the guideHow to save in Nigeria when inflation is high
The short answer
Nigerian banks and other payers deduct withholding tax of 10% from interest before it reaches you. Since 1 January 2026 this covers naira savings and fixed-deposit interest and foreign-currency deposit interest, and the tax authority has confirmed it applies to Treasury bills, commercial paper and corporate bonds held by individuals. Interest on Federal Government bonds, including FGN Savings Bonds, is exempt, and for individuals the deduction on deposit interest is treated as a final tax.
Many savers noticed a new line on their January 2026 statements: a deduction from the interest they had earned. That is withholding tax (WHT). It is charged only on the interest, never on the money you saved, but it changes which product pays more. Our guide to saving in Nigeria when inflation is high compares options after tax; this article explains the tax itself.
What withholding tax is and why it now reaches savers
WHT is income tax deducted at source by whoever pays you. Instead of waiting for you to declare interest, the bank, fund or issuer takes the tax off and sends it to the Nigeria Revenue Service (NRS), formerly the Federal Inland Revenue Service. The rate on interest is 10%.
The tax reform laws that took effect on 1 January 2026, led by the Nigeria Tax Act 2025, widened the net. On 29 October 2025 the NRS told banks to deduct WHT from interest payments from January, and banks began doing so on naira savings and fixed deposits. BusinessDay reports that banks also began deducting 10% on interest from foreign-currency deposits on the same date. Fintech savings apps deduct it too.
Separately, a public notice in October 2025 restated that WHT applies to interest on short-term securities: Treasury bills, commercial paper, promissory notes, bills of exchange and corporate bonds, payable to any person, including individuals. Payers must remit the tax by the 21st of the following month.
What is taxed and what is exempt
| Income | WHT at 10%? | Notes |
|---|---|---|
| Naira savings account interest | Yes | Deducted when interest is credited |
| Fixed-deposit interest | Yes | Usually deducted at maturity or on each interest payment |
| Foreign-currency (domiciliary) deposit interest | Yes, since 1 January 2026 | Deducted in the deposit currency |
| Treasury bills | Yes | Charged on the discount, the difference between price and face value |
| Commercial paper and corporate bonds | Yes | Deducted by the issuer or its agent |
| FGN bonds, including FGN Savings Bonds | No | Expressly exempt |
| CBN OMO bills | No | Reported exempt |
| Fintech savings plans paying interest | Yes | Same rules as bank interest |
Worked examples
A fixed deposit
₦500,000 in a 182-day fixed deposit at 15% a year earns gross interest of about ₦37,397. WHT at 10% is ₦3,740, so ₦33,658 is credited. Your effective rate is 13.5%.
A savings account
A ₦300,000 balance at the CBN minimum of 6.9% earns about ₦1,725 in a month. WHT takes ₦172.50. Small amounts, but on a large deposit base the total is large: BusinessDay estimated about ₦161 billion a year from savings deposits at eleven listed banks alone.
A Treasury bill
₦2,000,000 face value of 182-day bills bought at the 7 October 2026 stop rate of 15.80% costs about ₦1,842,433. The discount of about ₦157,567 is the interest. WHT is about ₦15,757, deducted at maturity, so you receive about ₦1,984,243. See our guide to buying Treasury bills for the price formula.
An FGN Savings Bond
₦1,000,000 in the October 2026 three-year bond at 14.071% pays about ₦35,178 every quarter, with no WHT deducted.
A dollar deposit
Take a hypothetical $5,000 domiciliary fixed deposit at 2% a year. Gross interest is $100; WHT is $10, deducted in dollars, leaving $90. The rate is illustrative: dollar deposit rates in Nigeria are low and vary by bank. Our article on saving in dollars covers the wider trade-offs.
How the tax changes the ranking
Because the tax falls on some products and not others, the order of the headline rates is not always the order of what you keep. Line them up after tax: a savings account at 6.9% becomes 6.21%; a fixed deposit at 15% becomes 13.5%; a 364-day Treasury bill at an 18.8% yield becomes about 16.9%; an FGN Savings Bond at 14.07% stays at 14.07%. The bond moves above the deposit once tax is counted.
Final tax or credit?
For individual savers, the 10% deducted from bank deposit interest is treated as a final tax. Tax advisers quoted by BusinessDay say you do not declare that interest again, and you cannot use the deduction to reduce PAYE on your salary. Salary and interest are separate income streams, so this is not double taxation.
For other interest, the notice says the recipient gets a credit for tax withheld unless the deduction is a final tax. If you file a self-assessment return, for example because you run a business, ask a tax adviser how to treat WHT on Treasury bills and corporate bonds in your return.
The Nigeria Tax Act exempts individuals earning ₦800,000 a year or less from income tax. The deduction on interest is made at source when interest is paid, before your total income for the year is known. If your total income is below the threshold, ask the NRS whether you can recover tax withheld.
Businesses are treated differently. A company that receives interest on deposits or Treasury bills usually gets a credit for WHT against its company income tax, so the deduction is not final. If your savings sit in a business account, keep the WHT receipts or credit notes from your bank and give them to whoever prepares the company's return. Our guide on getting paid in Nigeria covers the business side of withholding tax on payments received.
What to check on your statements
- Find the interest line and the WHT line. Each interest credit should show gross interest, tax withheld and the net amount.
- Check the rate: the WHT should be 10% of the interest, not of the balance.
- For fixed deposits and Treasury bills, ask for a contract note or maturity advice showing the same three figures.
- Keep a simple record of gross interest, WHT and net interest for each account and investment through the year.
- If tax was taken from an exempt instrument, such as an FGN bond coupon, raise it with the payer at once.
When you compare products, always use after-tax rates. Our article on real returns shows how to combine tax and inflation into one figure, and the comparison in fixed deposit vs savings account applies it to both.
Where Pryme fits
If you save in Pryme's Savings Boxes (Nigeria-only, in naira), apply the same checks as for any interest: look at how gross interest, any tax withheld and the net amount appear in the app and on your statement, and ask if they are not shown. The Interest-free Box earns no interest, so there is no interest to tax. For your own position, speak to a tax adviser.
For the full picture of which options are taxed and which are exempt, see the main savings guide.
Questions people ask
Why is my bank deducting tax from my savings interest?
Since 1 January 2026, under the tax reform laws, banks must deduct 10% withholding tax from interest paid on savings and fixed deposits and pay it to the Nigeria Revenue Service. It is taken from the interest only, not from your balance.
Is there withholding tax on Treasury bills in Nigeria?
Yes. An October 2025 public notice confirmed that 10% WHT applies to interest on Treasury bills and other short-term securities, including for individuals. It is charged on the discount at maturity.
Are FGN Savings Bonds taxed?
No. Interest on Federal Government bonds, including FGN Savings Bonds, is exempt from withholding tax.
Can I claim back withholding tax on my savings interest?
For individuals, WHT on bank deposit interest is generally a final tax and cannot be offset against PAYE. If your total income is below the ₦800,000 exemption threshold, ask the NRS whether a refund applies.
Is interest on my dollar domiciliary account taxed?
Yes. Banks began deducting 10% WHT on foreign-currency deposit interest on 1 January 2026.
Sources
- BusinessDay: why withholding tax was deducted from savings interest · accessed Oct 2026
- BusinessDay: banks deduct 10% WHT on foreign-currency deposit interest from 1 January 2026 · accessed Oct 2026
- Templars Transcripts (Tax), October 2025: FIRS public notice on WHT on short-term securities · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria guidance on WHT on interest from short-term securities · accessed Oct 2026
- PwC Nigeria: the Nigeria tax reform Acts, top 20 changes · accessed Oct 2026
- Nairametrics: NTB auction of 7 October 2026, 364-day stop rate 15.85% · accessed Oct 2026
- Nairametrics: FGN Savings Bond October 2026 offer · accessed Oct 2026
- CBN circular on savings deposit rate at 30% of MPR (via Blueprint) · 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.