The Nigeria Tax Act (NTA) 2025, which takes effect on January 1, 2026, introduces a significantly different personal income tax structure. Key changes include the removal of the Consolidated Relief Allowance (CRA), a higher tax-free threshold of ₦800,000, and new progressive tax bands reaching up to 25%.
Nigeria 2026 Tax Calculator
Based on the New Nigeria Tax Act (2026 Reforms)
| Total Annual Tax (PAYE) | ₦0.00 |
| Monthly Tax (PAYE) | ₦0.00 |
| Effective Tax Rate | 0% |
The New Nigeria Tax Reform 2026: What You Need to Know
The Nigerian landscape for Personal Income Tax (PAYE) has undergone its most significant shift in decades. As of January 1, 2026, the way your salary is taxed has changed fundamentally due to the Nigeria Tax Act of 2025. Whether you are an employer or an employee, understanding these changes is vital for financial planning.
What is the new tax-free threshold in Nigeria for 2026?
Under the new 2026 tax reform, the tax-free threshold has been significantly increased to ₦800,000 per annum. This means if your total annual taxable income is ₦800,000 or less, you will effectively pay 0% income tax. This move was designed to provide relief to low-income earners amidst rising inflation.
How has the Consolidated Relief Allowance (CRA) changed?
The most notable change in the 2026 reform is the complete removal of the Consolidated Relief Allowance (CRA). Previously, taxpayers enjoyed a relief of ₦200,000 or 1% of gross income (whichever was higher) plus 20% of gross income. In the new system, this has been replaced by the higher tax-free threshold (₦800,000) and specific deductions like the new Rent Relief.
Can I still deduct my rent from my taxes in 2026?
Yes, the 2026 tax law introduces a specific Rent Relief. Taxpayers can now deduct 20% of their actual rent paid from their taxable income, provided the deduction does not exceed ₦500,000 per year. To benefit from this, employees usually need to provide proof of rent payment to their HR or tax consultants.
What are the new 2026 PAYE tax brackets and rates?
The 2026 tax system remains progressive, but the brackets have been widened. After your ₦800,000 exemption and statutory deductions (Pension, NHF, Rent Relief), the remaining income is taxed as follows:
- First ₦800,000: 0%
- Next ₦2,200,000: 15%
- Next ₦9,000,000: 18%
- Next ₦13,000,000: 21%
- Next ₦25,000,000: 23%
- Above ₦50,000,000: 25%
Are Pension and NHF contributions still tax-deductible?
Yes. Contributions to the Statutory Pension Scheme (typically 8%) and the National Housing Fund (2.5%) remain “allowable deductions.” These amounts are subtracted from your Gross Income before the tax rates are applied, effectively lowering your total tax burden.
How will the 2026 tax reform affect my monthly take-home pay?
For most low-to-middle-income earners, the higher tax-free threshold and new rent relief may result in a slight increase in take-home pay. However, high-income earners (those earning above ₦50 million annually) may see an increase in their tax liability due to the new 25% top-tier tax rate.
How can I calculate my new 2026 salary after tax?
To calculate your new net salary, you must first subtract your Pension (8%), NHF (2.5%), and 20% of your rent (capped at ₦500k) from your Gross Income. Then, apply the progressive tax rates to the balance.
Who is required to pay tax under the 2026 Nigeria Tax Reform?
The 2026 tax reforms apply to a broad category of individuals earning income within Nigeria. Specifically, the following groups are required to comply with the new PAYE (Pay As You Earn) and Personal Income Tax (PIT) regulations:
- Salaried Employees: Any individual employed in the public or private sector whose annual income exceeds the ₦800,000 tax-free threshold.
- Freelancers and Gig Workers: Digital nomads, independent contractors, and creative professionals (such as influencers and developers) who reside in Nigeria for more than 183 days a year.
- Sole Proprietors and Business Owners: Entrepreneurs running unregistered businesses or “Enterprise” setups where the business income is treated as personal income.
- High-Net-Worth Individuals (HNWIs): Those earning significant income from investments, dividends (where applicable), or multiple revenue streams, now subject to the top 25% tax bracket for earnings above ₦50 million.
- Non-Residents Earning in Nigeria: Foreigners who perform duties in Nigeria or derive income from Nigerian sources, subject to the “183-day rule” and Double Taxation Agreements (DTA).
Are there any exemptions under the new law?
While the net is wide, the 2026 reform provides specific exemptions to protect the most vulnerable. You are exempt from paying personal income tax if:
- Low-Income Earners: Your total annual income is ₦800,000 or less.
- Pensioners: Retirement benefits and gratuities remain largely protected under the new guidelines to ensure retirees maintain their purchasing power.
- Specific Investment Income: Certain government bonds and specific corporate bonds may remain tax-exempt to encourage local investment.