Minimum Income Tax Calculator

Ever finished your tax returns and felt like you got away with too little? That is where the Minimum Tax rule steps in. It is like the government saying, “You must pay at least this much,” usually 1% of your total income.

This calculator helps you avoid a tax problem: it compares your normal tax bill with the minimum tax to tell you the higher, and therefore correct, amount you must pay. Use it before you file to confirm your real liability.

Minimum Income Tax Calculator

Minimum Income Tax Calculator

Compare regular PAYE with minimum tax liability

What is Minimum Tax?

Minimum Tax is typically 1% of gross turnover or total annual income. It applies when the calculated tax under normal PAYE is low or nil, ensuring a base level of contribution to government revenue.

For individuals: total income from all sources

NHF, pension, NHIS, life insurance (max 20% of gross)

Higher of ₦200k + 20% of gross or 1% of gross

Tax deducted through PAYE or withholding

Typically 1% of gross income/turnover

The Minimum Tax Checker: Stop Paying Too Much

1. Set the Stage: Currency and Taxpayer Type

First things first, select your basic settings.

  • Select Currency: Click the button for your reporting currency: ₦ NGN, $ USD, £ GBP, or € EUR. All input fields will update to match.
  • Taxpayer Type: Choose who is filing:
    • Individual: This is for salaries (PAYE), small business owners, or sole traders.
    • Company: This is for incorporated businesses paying Corporate Income Tax (CIT).

2. Plug in Your Income and Deductions

The calculator needs specific numbers depending on your type. Garbage in means garbage out, so be accurate here.

For Individuals:

The tool calculates your standard PAYE tax first, then checks it against the minimum tax.

  • Total Annual Income/Gross Turnover: Your total yearly earnings before tax relief.
  • Total Allowable Deductions: Enter amounts for things like approved pension contributions or the National Health Insurance Scheme (NHIS).
  • Consolidated Relief Allowance (CRA): This is a key allowance. Enter your calculated CRA amount.
  • Tax Already Paid (PAYE/WHT): Any tax already deducted from your salary or income source.

For Companies:

Companies just need two figures to trigger the comparison.

  • Gross Turnover: Your company’s total revenue for the period.
  • Calculated CIT: The tax amount you arrived at using the normal corporate tax rules (Taxable Profit x CIT Rate).

Tip: Look at the Minimum Tax Rate (%) field. It defaults to 1.0%. This is the standard rate. Only change it if you are 100% sure a different specific rate applies to your business category.

3. Review the Results and Final Liability

Click the Calculate Tax Liability button. The Results section shows three key figures:

  • Regular Tax: The tax calculated using the standard progressive rates (for individuals) or your provided CIT (for companies).
  • Minimum Tax: 1% of your Gross Income or Turnover.
  • Tax Payable: The single, definitive amount you must pay. This is always the higher of the Regular Tax and the Minimum Tax.

Check the yellow Warning Box ⚠️: If it appears, it means your Regular Tax was low, and you are being forced to pay the higher Minimum Tax. You just saved yourself a potential penalty or audit.

Do you want to run the numbers for your business or personal income?