From 1 January 2026, employment income in Nigeria is taxed under the Nigeria Tax Act, 2025. The old seven-band table and the Consolidated Relief Allowance are gone. In their place is a six-band progressive table with a generous 0% starting band.
The 2026 personal income tax bands
| Annual taxable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (₦800,001 – ₦3,000,000) | 15% |
| Next ₦9,000,000 (₦3,000,001 – ₦12,000,000) | 18% |
| Next ₦13,000,000 (₦12,000,001 – ₦25,000,000) | 21% |
| Next ₦25,000,000 (₦25,000,001 – ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
Taxable income is gross income less allowable deductions. Statutory pension contributions remain deductible, and tenants can claim rent relief of 20% of annual rent up to ₦500,000. Confirm any other deductions you rely on — such as NHF, NHIS or life assurance — against the final text of the Act and NRS guidance.
Worked examples
1. National minimum wage earner — ₦840,000 a year
Pension at 8% is ₦67,200, leaving taxable income of ₦772,800. That is within the 0% band, so no income tax is payable.
2. Mid-level professional — ₦6,000,000 a year, renting at ₦1,200,000
- Pension (8%): ₦480,000
- Rent relief (20% of ₦1,200,000): ₦240,000
- Taxable income: ₦5,280,000
- Tax: ₦0 on the first ₦800,000 + ₦330,000 (15% of ₦2,200,000) + ₦410,400 (18% of ₦2,280,000) = ₦740,400 a year
- Effective rate on gross pay: about 12.3% — roughly ₦61,700 a month
3. Senior executive — ₦30,000,000 a year, renting at ₦4,000,000
- Pension (8%): ₦2,400,000
- Rent relief (capped): ₦500,000
- Taxable income: ₦27,100,000
- Tax: ₦330,000 + ₦1,620,000 + ₦2,730,000 + ₦483,000 = ₦5,163,000 a year
- Effective rate on gross pay: about 17.2%
Try your own figures
Rent relief: ₦240,000 (20% of rent, capped at ₦500,000)
Tax per month
₦61,700
Tax per year
₦740,400
Effective rate
12.3%
How your taxable income of ₦5,280,000 falls across the bands
- 0%
- 15%
- 18%
- 21%
- 23%
- 25%
| Band | Rate | Income in band | Tax |
|---|---|---|---|
| ₦0–₦800K | 0% | ₦800,000 | ₦0 |
| ₦800K–₦3M | 15% | ₦2,200,000 | ₦330,000 |
| ₦3M–₦12M | 18% | ₦2,280,000 | ₦410,400 |
| ₦12M–₦25M | 21% | ₦0 | ₦0 |
| ₦25M–₦50M | 23% | ₦0 | ₦0 |
| Above ₦50M | 25% | ₦0 | ₦0 |
| Total annual tax | ₦740,400 | ||
Estimate only, using the Nigeria Tax Act 2025 bands. Pension is approximated at 8% of gross; other deductions (NHF, NHIS, life assurance) are not included. Speak to KJB for advice on your circumstances.
Who pays more, who pays less
The 0% band means most low-income workers now pay nothing. For middle earners the outcome depends on rent and pension: losing the CRA hurts, but the wider lower bands help. Above roughly ₦25 million, the higher marginal rates generally outweigh the reliefs, and the top 25% rate applies to every naira above ₦50 million. Homeowners lose out compared with tenants, since rent relief is their only replacement for the CRA.
What employers must do
- Update payroll software to the new bands from January 2026 payroll.
- Collect rent declarations and supporting evidence from employees who claim rent relief.
- Re-cost tax-equalised and expatriate packages — KPMG notes effective rates for some high earners rise materially.
- Remember that bonuses and terminal benefits paid after an employee leaves are still taxable.
- File annual employee returns by 31 January.
Sources
- KPMG — Nigeria: Changes to personal income tax under the Nigeria Tax Act 2025
- Banwo & Ighodalo — A taxpayer’s guide to compliance, offences, penalties and dispute resolution
- PwC Nigeria — The Nigerian Tax Reform Acts
This article is general information based on the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025 and published commentary as at its date. It is not tax advice. Rules, thresholds and NRS guidance may change — speak to KJB about your specific circumstances.
