Most Nigerians fall into one of two groups:
• You ignore tax completely
• Or you pay it… but don’t really understand what’s being deducted
Both can cost you money.
Because here’s the thing:
Tax in Nigeria isn’t always wrong, but it’s often not checked.
And when you don’t check it, you can easily overpay.
1. First; Do You Even Need to Worry About Tax?
If you earn money, yes.
That includes:
• salary (your 9–5 job)
• freelance or remote work
• business income
• side hustles
Even if your employer deducts tax already, you’re still responsible for understanding it.
2. The Only 3 Terms You Need to Understand
Forget all the big grammar, these three are enough:
PAYE (Pay As You Earn)
This is for salary earners.
Your employer:
• calculates your tax
• deducts it monthly
• sends it to the government
Simple.
Taxable Income
This is not your full salary.
It’s what’s left after certain deductions are removed.
This is where many people miss it, because if deductions aren’t applied properly, you end up paying tax on more than you should.
Filing Your Returns
This simply means:
declaring your total income for the year
Not as complicated as it sounds.
Under Nigerian tax laws (via the Federal Inland Revenue Service), every taxable adult is expected to file an annual tax return, including salary earners.
3. How to File Your Tax Returns (Without Stress)
You don’t need to overthink this.
Step 1: Have a TIN
Your Tax Identification Number.
If you’ve worked before, you may already have it.
Step 2: Gather your income info
• salary (if employed)
• any extra income
Step 3: Submit through your state
For example:
• Lagos → Lagos State Internal Revenue Service
• National oversight → Federal Inland Revenue Service
Step 4: Don’t miss the deadline
Usually March 31
Miss it, and you may face penalties.
4. The Part That Saves You Money: Deductions
This is where people quietly lose money.
You are not supposed to be taxed on your full income.
Before tax is calculated, certain amounts are removed.
The key one: Relief Allowance (CRA)
This reduces your taxable income using:
• a fixed amount
• plus a percentage
If this isn’t applied properly, you overpay. Simple.
Other common deductions:
• Pension contributions
• NHF (housing fund)
• Health insurance
What this means for you:
If you earn ₦100,000,
you shouldn’t be taxed on the full ₦100,000.
Only what’s left after deductions.
5. Where Most Nigerians Get It Wrong
Let’s be real:
“My employer has handled it”
Sometimes yes. Sometimes no.
Mistakes happen, and you’re the one paying for them.
Not checking payslips
You see your salary, but not:
• what was removed
• why it was removed
Ignoring side income
That extra money? It still counts.
Not filing at all
Even if tax is deducted, you may still need to file.
6. How to Avoid Overpaying (Simple Moves)
No hacks. Just awareness.
Check your payslip monthly
Don’t just receive salary, understand it.
Know your deductions
At least:
• pension
• relief allowance
Keep basic records
Especially if you earn from different sources.
Ask questions
If something looks off, don’t ignore it.
7. When Should You Be Concerned?
Pay attention if:
• your tax feels unusually high
• your deductions don’t make sense
• your income has changed but tax hasn’t adjusted
References:
• Federal Inland Revenue Service (FIRS)
• Lagos State Internal Revenue Service (LIRS)
• Joint Tax Board (JTB)
• Personal Income Tax Act
Tax Basics for Nigerians: How to File Your Returns and Claim Deductions Without Overpaying
