Nigeria's income tax landscape changed fundamentally for 2026 with the Nigeria Tax Act, 2025 and the 2026 Personal Income Tax Guidelines. The new framework replaced the Personal Income Tax Act (PITA) structure that had governed Nigerian payroll taxes for decades. If you are an employee, employer, or HR professional trying to understand what these changes mean in practice, this guide covers everything - from the new tax bands and the abolition of the Consolidated Relief Allowance (CRA) to pension rules, the National Housing Fund, and tax filing deadlines.
Source check, June 17, 2026: This guide was refreshed against the Joint Revenue Board's Personal Income Tax Guidelines, 2026, official Nigeria Tax Act, 2025 source copies, and PenCom's Contributory Pension Scheme FAQ. Treat the examples as payroll planning, not a tax assessment from your relevant tax authority.
Use the AfroTools Nigeria PAYE Calculator to instantly compute your take-home pay under the new 2026 PIT rules without doing any manual arithmetic.
PITA vs 2026 PIT Rules: What Changed?
The Personal Income Tax Act (PITA), as amended through 2011 and later, was the primary legislation governing individual income tax in Nigeria for over a decade. The Nigeria Tax Act, 2025 is a comprehensive reform, effective for 2026 payroll planning, that consolidates several tax laws, introduces new reliefs, and restructures the rate schedule to be more progressive.
The key structural changes affecting PAYE employees are:
| Feature | Under PITA (pre-2026) | Under 2026 rules |
|---|---|---|
| Tax-free band | None (CRA provided relief instead) | ₦800,000 per year at 0% |
| Consolidated Relief Allowance | 20% of gross + higher of ₦200k or 1% of gross | Abolished |
| Rent relief | Not available | 20% of annual rent paid, capped at ₦500,000 |
| Top marginal rate | 24% | 25% |
| Number of tax bands | 6 | 6 (restructured) |
| Minimum wage exemption | Employees at minimum wage | First ₦800k/year at 0% (broader) |
For most low- and middle-income earners, the 2026 rules are more favorable than PITA because the ₦800,000 zero-rate band provides direct relief that is simpler than the old CRA calculation. High-income earners may see marginally higher tax at the top end due to the 25% rate replacing the 24% ceiling.
What Are the New 2026 PIT Tax Bands?
The 2026 PIT Guidelines restructure the progressive income tax schedule. After all allowable deductions (pension, NHF, and applicable reliefs), the remaining taxable income is taxed according to the following bands:
| Annual Taxable Income Band | Tax Rate | Tax on Band | Cumulative Max Tax |
|---|---|---|---|
| First ₦800,000 | 0% | ₦0 | ₦0 |
| Next ₦2,200,000 | 15% | ₦330,000 | ₦330,000 |
| Next ₦9,000,000 | 18% | ₦1,620,000 | ₦1,950,000 |
| Next ₦13,000,000 | 21% | ₦2,730,000 | ₦4,680,000 |
| Next ₦25,000,000 | 23% | ₦5,750,000 | ₦10,430,000 |
| Above ₦50,000,000 | 25% | Variable | Variable |
The 0% band on the first ₦800,000 of taxable income is the single most significant change for ordinary workers. An employee with a gross annual salary of ₦3,000,000 who previously had a modest taxable income after CRA may now have a very different (and often lower) effective tax rate depending on their salary structure and available reliefs. Use the PAYE Calculator to model your specific situation.
One important nuance: because the old CRA was calculated as a percentage of gross income, very high earners benefited substantially from the CRA. Under the 2026 rules, the fixed ₦800,000 zero-rate band is less proportionally valuable to high earners, but the simplified structure makes compliance easier for employers.
Calculate Your Nigeria Take-Home Pay Under 2026 Rules
Open Nigeria PAYE CalculatorWhy Was CRA Abolished and What Is the New Rent Relief?
The Consolidated Relief Allowance was for many years the cornerstone of Nigeria's personal income tax structure. Under PITA, it was calculated as 20% of gross income plus the higher of ₦200,000 or 1% of gross income. This meant the CRA scaled upward with salary - a significant benefit for those on higher incomes.
The 2026 rules remove the CRA entirely and replace it with a more targeted system:
- Rent Relief: Employees who pay rent may claim 20% of annual rent paid, capped at ₦500,000, where the required rent information and evidence are provided to the relevant tax authority.
- Zero-Rate Band: The first ₦800,000 of taxable income is automatically taxed at 0%, providing universal relief without requiring any paperwork from employees.
For employees who do not pay rent (homeowners, those living in employer-provided housing), the rent relief is unavailable, but the ₦800,000 zero-rate band still applies. Employers must adjust their payroll systems to reflect these changes - failure to do so may result in either over- or under-deduction of PAYE.
What Are the Pension Contribution Rules?
The Pension Reform Act 2014 (PRA 2014) governs mandatory pension contributions and was not repealed by the tax reform. PenCom's current CPS FAQ states the rules as follows:
- Employee contribution: Minimum 8% of the sum of basic salary + housing allowance + transport allowance (the "pensionable emoluments").
- Employer contribution: Minimum 10% of the same pensionable emoluments base.
- Applicability: Mandatory for organizations with 3 or more employees in the private sector. Public sector employees are covered under the Contributory Pension Scheme (CPS) administered through the Pension Transitional Arrangement Directorate (PTAD) for transitional arrangements.
- Tax treatment: Pension contributions are not taxed under PRA 2014, and eligible pension contributions reduce taxable emoluments before PAYE is calculated.
- Voluntary contributions: Additional voluntary pension contributions may be possible, but PenCom notes that employee contributions and other deductions should not exceed one-third of monthly emoluments.
A practical example: if your monthly gross salary is ₦600,000, comprising ₦300,000 basic, ₦150,000 housing, and ₦150,000 transport, your pensionable emoluments are ₦600,000 per month. Your mandatory employee pension contribution is 8% x ₦600,000 = ₦48,000 per month, or ₦576,000 per year. This amount is subtracted from taxable emoluments before the 2026 PIT bands are applied.
How Does the National Housing Fund (NHF) 2.5% Work?
The National Housing Fund contribution of 2.5% of basic salary is established under the National Housing Fund Act 1992 and remains a statutory deduction in the 2026 PIT Guidelines. Key facts:
- Rate: 2.5% of basic salary only (not total gross)
- Applicability: All Nigerian workers in both public and private sectors earning above the national minimum wage (currently ₦70,000 monthly)
- Administration: Collected by the Federal Mortgage Bank of Nigeria (FMBN)
- Tax treatment: NHF contributions are deductible from taxable income, reducing the base on which PAYE is computed
- Benefit: Registered contributors can access loans through the National Housing Fund at subsidized interest rates of approximately 6% per annum, significantly below commercial mortgage rates of 20-30% currently prevailing in Nigeria
Many employees do not realize that NHF contributions, while mandatory, are also a form of forced savings that can be refunded with accrued interest upon retirement, permanent disability, or death. If you change jobs, your NHF contributions follow your National Identification Number (NIN) and are transferable.
How Do Nigeria Revenue Service and State Revenue Administration Work?
A common source of confusion is which tax authority handles your personal income tax. In Nigeria, this depends on the type of taxpayer:
- PAYE employees: Your income tax is generally remitted to the Internal Revenue Service of the state where you are resident. If you live in Lagos, your employer remits your PAYE to the Lagos Internal Revenue Service (LIRS). If you live in Abuja, it goes to the FCT Internal Revenue Service.
- Self-employed individuals and sole proprietors: Also assessed by their State Internal Revenue Service.
- Companies and federal categories: The Nigeria Revenue Service handles federal tax functions and personal income tax for categories such as non-residents, diplomats, and members of the armed forces.
- VAT: Administered through the federal revenue service framework. See the AfroTools VAT Calculator for quick VAT computations.
The 2026 guidelines define the relevant tax authority as the Nigeria Revenue Service, a State Internal Revenue Service, or the FCT Internal Revenue Service, depending on taxpayer category and residence. Day-to-day PAYE administration for most resident employees remains at the state or FCT level.
What Are the Tax Filing Deadlines?
Understanding filing deadlines is critical to avoid penalties. Under the 2026 Personal Income Tax Guidelines:
| Obligation | Who | Deadline | Penalty for Late Filing |
|---|---|---|---|
| Annual income tax return (Form A) | Taxable individuals | March 31 (following year) | Administrative penalty and interest where applicable |
| Monthly PAYE remittance | Employers | 10th of the following month | 10% of tax not remitted + interest |
| Annual employer returns | Employers (Form H1) | January 31 (following year) | Administrative penalty for failure to file or inaccurate returns |
| Tax clearance certificate | Individuals/businesses requesting | Annual renewal | Cannot be issued without compliance |
The 2026 guidelines say every taxable person, whether or not liable to pay tax, files an annual return with the relevant tax authority by March 31 for the preceding basis period. Employees with only PAYE salary should still confirm their state or FCT filing process because portals and enforcement practice can differ. For import-related activities and the tax treatment of goods brought into Nigeria, see the Import Duty Calculator.
What Are Employer Obligations Under 2026 PIT Rules?
Employers bear significant responsibility for the correct administration of PAYE. The 2026 guidelines reinforce these obligations:
Registration
Every employer must be registered with the relevant tax authority and obtain the applicable Tax ID for payroll compliance. Employees also need a Tax ID for returns, notices, correspondence, and tax compliance documents.
Monthly Deduction and Remittance
PAYE must be deducted from employee salaries each month and remitted to the relevant tax authority by the 10th day of the following month. The JRB guidelines list liability for the unremitted amount, a 10% per annum administrative penalty, and interest at the Central Bank of Nigeria's monetary policy rate for failure to remit tax deducted at source.
Payslip Requirements
Employers should provide employees with detailed payslips showing gross pay, each deduction itemized (PAYE, pension, NHF), and net pay. Keep these records aligned with the tax deduction form or other format prescribed by the relevant tax authority.
Annual Returns
By January 31 each year, employers must file the annual employer PAYE return with the relevant tax authority showing emoluments paid to employees in the preceding year. Delays or inaccuracies can affect employees' ability to obtain a Tax Clearance Certificate.
Thinking of Importing Goods? Calculate Your Duties First
Import Duty CalculatorDigital Filing Mandate
The 2026 framework continues the move toward digital tax administration through federal, state, and FCT portals. Employers should follow the portal and filing format prescribed by their relevant tax authority rather than assuming one national PAYE portal covers every resident employee.
Employee Notifications
When an employee leaves (resignation, termination, or retirement), employers should close out the final PAYE deduction and keep the payroll, Tax ID, and pension records aligned. Missed remittances or inaccurate records can create problems for the employee's Tax Clearance Certificate or pension records.
For Nigerians considering opportunities abroad, understanding your full tax position - including potential obligations on foreign income - is essential. The Japa Cost Calculator helps you model the financial impact of relocating, including tax considerations.
Planning to Relocate? Calculate Your Japa Costs
Open Japa Cost CalculatorFrequently Asked Questions
What replaced the Consolidated Relief Allowance (CRA) under the 2026 PIT rules?
The Nigeria Tax Act, 2025, effective for 2026 PAYE, abolished the CRA and replaced it with a 0% tax rate on the first ₦800,000 of annual taxable income, plus Rent Relief of 20% of annual rent paid capped at ₦500,000 for qualifying taxpayers who provide the required rent information.
What are the new 2026 PIT tax bands for Nigeria?
The 2026 PIT bands are: 0% on the first ₦800,000; 15% on the next ₦2,200,000; 18% on the next ₦9,000,000; 21% on the next ₦13,000,000; 23% on the next ₦25,000,000; and 25% above ₦50,000,000. Use the PAYE Calculator to compute your exact tax under the new bands.
Is pension contribution still mandatory under the 2026 PIT rules?
Yes. Pension contributions under the Pension Reform Act 2014 remain mandatory and unchanged. Employees contribute a minimum of 8% of their pensionable emoluments (basic + housing + transport allowances), while employers contribute a minimum of 10%. Both contributions are tax-deductible.
Who administers income tax in Nigeria - NRS, FCT IRS or state revenue services?
PAYE for most employees is administered by the Internal Revenue Service of the state where the employee is resident, or by the FCT Internal Revenue Service for FCT residents. The Nigeria Revenue Service administers personal income tax for categories such as non-residents, diplomats, and members of the armed forces.
When is the deadline for filing Nigeria personal income tax returns?
The annual personal income tax return is due by March 31 under the 2026 PIT Guidelines. The guideline says every taxable person, whether or not liable to pay tax, should file with the relevant tax authority. Employers must remit monthly PAYE by the 10th day of the following month and file annual employer PAYE returns by January 31.