How to Calculate Your Tax as a Nigerian Freelancer (Step-by-Step)

The Freelancer Tax Calculation, Demystified

If you've been putting off understanding your tax liability because it seems too complicated, this guide is for you. We'll walk through the entire calculation with real numbers.

Step 1: Total Your Annual Income

First, add up everything you earned in the tax year. For freelancers, this typically includes:

Example: Chidi the Developer

Upwork earnings: $24,000 USD

Direct client work: $6,000 USD

Total in USD: $30,000

Step 2: Convert to Naira

You need to convert foreign currency to Naira. Use the CBN rate at the time each payment was received.

For simplicity, let's use an average rate of ₦1,500/USD:

$30,000 × ₦1,500 = ₦45,000,000

Pro tip: TaxJeje automatically tracks exchange rates at the time of each payment, so you don't have to remember.

Step 3: Calculate Your Deductions

Business expenses reduce your taxable income. Common deductions for freelancers:

ExpenseAnnual Cost

Internet (MTN/Airtel)₦180,000
Software (Figma, GitHub, etc.)₦150,000
Laptop depreciation₦200,000
Co-working space₦360,000
Professional courses₦100,000
Home office (20% of rent)₦240,000
Total Deductions₦1,230,000

Taxable income: ₦45,000,000 - ₦1,230,000 = ₦43,770,000

Step 4: Apply the Consolidated Relief Allowance (CRA)

The CRA gives you additional relief:

₦200,000 fixed allowance, OR

1% of gross income (whichever is higher)

PLUS 20% of gross income

For Chidi:

1% of ₦45,000,000 = ₦450,000 (higher than ₦200,000)

20% of ₦45,000,000 = ₦9,000,000

Total CRA: ₦9,450,000

New taxable income: ₦43,770,000 - ₦9,450,000 = ₦34,320,000

Step 5: Apply Tax Brackets

Now we apply the progressive tax rates:

BracketAmountRateTax

First ₦300,000₦300,0007%₦21,000
Next ₦300,000₦300,00011%₦33,000
Next ₦500,000₦500,00015%₦75,000
Next ₦500,000₦500,00019%₦95,000
Next ₦1,600,000₦1,600,00021%₦336,000
Remaining ₦31,120,000₦31,120,00024%₦7,468,800
Total Tax₦8,028,800

The Final Numbers

For Chidi earning $30,000/year:

Gross Income: ₦45,000,000

After Deductions: ₦43,770,000

After CRA: ₦34,320,000

Tax Owed: ₦8,028,800

Effective tax rate: 17.8%

A Simpler Example

Let's look at someone earning less:

Amara the Content Creator

YouTube AdSense: $800/month = $9,600/year

Brand deals: $400/month = $4,800/year

Total: $14,400 USD = ₦21,600,000

After deductions (₦600,000) and CRA (₦4,520,000):

Taxable income: ₦16,480,000

Tax owed: ~₦3,400,000

Effective rate: 15.7%

Why Tracking Matters

Notice how deductions significantly reduce your tax? Every receipt you save, every business expense you track, directly reduces what you owe.

Without proper tracking, Chidi would miss ₦1,230,000 in deductions — costing him an extra ₦295,000+ in taxes.

Let TaxJeje Do the Math

This calculation is exactly what TaxJeje automates:

Track income in any currency

Log deductible expenses

See your estimated tax in real-time

Generate filing-ready reports

Calculate Your Tax Free →