Nigeria's New Tax Law 2026: How the Nigeria Tax Act Changes Your Salary

If your payslip has looked different since January, you are not imagining things. The Nigeria Tax Act 2025, signed into law in June 2025 and effective from 1 January 2026, rewrote personal income tax from the ground up — new bands, a new relief structure, and a higher top rate for high earners.

Here is exactly what changed, and how to check what it means for your own salary.

The Old System vs. The New One

Under the old Personal Income Tax Act (PITA), the top marginal rate was 24%, income was taxed across seven narrow bands, and everyone got a Consolidated Relief Allowance (CRA) — a blend of a flat amount plus a percentage of income — before tax was calculated.

The Nigeria Tax Act 2025 scraps all of that. The CRA is gone. In its place: a simpler six-band structure with a much larger tax-free threshold at the bottom, and a new top rate of 25% at the very top.

The New Tax Bands

Annual chargeable income (after reliefs) is now taxed like this:

0% on the first ₦800,000
15% on the next ₦2,200,000 (up to ₦3m)
18% on the next ₦9,000,000 (up to ₦12m)
21% on the next ₦13,000,000 (up to ₦25m)
23% on the next ₦25,000,000 (up to ₦50m)
25% on everything above ₦50,000,000

The tax-free first ₦800,000 is the headline change — it did not exist under the old system, and combined with a separate rule exempting national minimum wage earners (₦70,000/month) from PAYE entirely, it means Nigeria's lowest earners now pay nothing.

What Replaced the CRA: Rent Relief

Instead of the old blanket CRA, the new law gives you a rent relief: 20% of the annual rent you actually pay, capped at ₦500,000 a year. You will need to be able to show what you pay in rent to claim it.

Everything else that reduced your taxable income before still does:

Pension — 8% employee contribution
NHF (National Housing Fund) — 2.5%, now optional for private-sector employees rather than automatic
NHIS (health insurance) — typically 5%, where your employer runs a scheme
Life insurance premiums and mortgage interest on a self-occupied home

Who Pays More, Who Pays Less

Broadly:

Lower earners are better off. The ₦800,000 tax-free band plus the minimum wage exemption take a meaningful chunk of low-income Nigerians out of PAYE entirely.
Middle earners will feel a mix of effects depending on how much rent they pay — the rent relief can be worth more or less than the old CRA depending on your rent-to-income ratio.
High earners (above ₦50m/year) now face a 25% top rate, up from 24% under the old law.

The only way to know for sure where you land is to run your own numbers — reliefs interact with each other, and a small change in rent or pension contribution can shift your chargeable income across a band boundary.

Check Your Own Numbers

We built a free PAYE / Salary Tax Calculator that applies the new law exactly as described above — enter your gross salary, toggle pension/NHF/NHIS, add your annual rent, and see your net monthly and annual take-home pay, plus a full band-by-band breakdown of where your tax is going.

It takes less than a minute and works whether you're checking your own payslip or sizing up a new job offer.

Figures in this article reflect the Nigeria Tax Act 2025 as enacted. Tax rules can be amended — always confirm current rates with your employer's payroll team or a tax professional before making financial decisions.