Nigeria Tax Act 2025/2026: PAYE, Rent Relief and New Rates

The Nigeria Tax Act, 2025 is part of Nigeria's 2025 tax reform package and is expected to shape PAYE calculations from 2026. It does not merely rename the old Personal Income Tax Act. It changes the relief structure, introduces a new personal income tax rate table, and forces employers to refresh payroll assumptions that were built around the old Consolidated Relief Allowance.

Source check, June 17, 2026. The older version of this guide used draft-era numbers for rent relief, tax bands, NHIS treatment and Development Levy. This refresh aligns the article with the gazetted reform-law summaries, the Presidential Fiscal Policy and Tax Reforms Committee, and current professional tax summaries from PwC, EY and Mercans. Use it as a planning guide, not as a substitute for payroll advice or the final gazetted law text.

Overview: What Changed for Employees?

For employees and employers, the high-impact PAYE changes are:

• The Consolidated Relief Allowance (CRA) is removed.
• A new 0% personal income tax band up to NGN 800,000 appears in common summaries of the new rate table.
• A new rent relief replaces CRA for eligible taxpayers: 20% of annual rent paid, capped at NGN 500,000.
• The personal income tax bands are restructured, with the top marginal rate commonly summarized as 25% above NGN 50 million.
• Documented deductions such as pension, National Housing Fund and National Health Insurance remain important payroll inputs according to current professional summaries.
• Development Levy should not be treated as a flat NGN 4,000 individual PAYE levy without checking the final law, employer policy and state payroll treatment.

The practical effect is simple: every payroll team should rebuild its PAYE model from the current law text and published guidance, not from old PITA spreadsheets. Employees should also check whether their payslip still shows CRA, old bands, or unsupported levy labels. You can see salary scenarios with the Nigeria PAYE Calculator.

CRA Removed, What Replaces It

How CRA Worked Under PITA

Under the old PITA system, many payroll models applied a Consolidated Relief Allowance before calculating taxable income. That CRA was often described as a flat amount plus a percentage of gross income, making it especially valuable for higher earners.

The New Relief Model: Zero Band + Rent Relief

Under the new reform summaries, the employee-side model moves away from CRA and toward two practical ideas:

1. NGN 800,000 zero-rate band: The first NGN 800,000 of taxable income is taxed at 0% in the new rate table.
2. Rent relief: 20% of annual rent paid, subject to a maximum of NGN 500,000, for eligible taxpayers who can document the rent.

This means rent evidence becomes more important. If payroll needs documentation, employees should keep tenancy agreements, receipts, bank transfers or other proof requested by HR. Do not assume a universal NGN 500,000 deduction applies automatically. The cap is the maximum, not a default amount for everyone.

New Personal Income Tax Band Structure

Current tax summaries of the new law show the following annual personal income tax bands:

This is materially different from the previous draft-style table that placed a 7% band immediately after NGN 800,000. If your payroll software still uses a 7%, 11%, 15%, 19%, 21% and 24% ladder for the 2026 reform, it may be using a stale model and should be reviewed.

Rent Relief Under the New Rules

The rent relief is a major replacement for CRA. Current professional summaries describe it as 20% of annual rent paid, capped at NGN 500,000. That is why the relief has to be tied to actual rent and documentation.

How It Works

• Formula: 20% of annual rent paid.
• Maximum relief: NGN 500,000 per year.
• Documentation: Keep tenancy agreements, receipts, bank transfers or employer-requested evidence.
• Payroll action: Employers should collect and retain evidence before applying the relief.

If you do not pay rent, or if your employer cannot verify your claim, you should not assume the relief will be applied. If your rent is low, 20% of actual rent may be below the NGN 500,000 cap.

Pension and Other Payroll Deductions

Current summaries of the new tax rules say existing documented reliefs and deductions remain relevant, including pension, National Housing Fund, National Health Insurance, life insurance premiums and mortgage interest where conditions are met. Payroll teams should validate each item against the final law and keep documentary support.

Pension Contributions

• Employee contribution: Commonly 8% minimum under the pension framework.
• Employer contribution: Commonly 10% minimum under the same framework.
• Payroll point: Pension remains one of the most important pre-tax inputs, but the pensionable base depends on the employee's salary structure and pension rules.

NHF, NHIS and Development Levy

National Housing Fund and Health Insurance

Do not assume NHIS is automatically an after-tax deduction under the reform. Current summaries from EY and PwC describe pension, NHF and NHIS as retained eligible deductions or reliefs when properly documented. If your payroll has changed NHIS treatment, ask HR for the law section or tax-adviser memo behind the change.

Development Levy

The previous version of this article described a flat NGN 4,000 individual Development Levy under PAYE. That is not a safe current claim. Current reform summaries describe Development Levy mainly in the business-tax context, not as a universal individual PAYE charge. If your payslip shows a state levy or development levy, confirm whether it is a separate state charge, an employer policy label, or a specific statutory deduction.

What Employees Should Check on Their Payslip

Instead of relying on generic comparison tables, check the actual fields that control your PAYE:

• Does the payroll still show CRA or old PITA relief logic?
• Does the tax table start with the NGN 800,000 zero-rate band?
• Is rent relief capped at NGN 500,000 and backed by documents?
• Are pension, NHF and NHIS fields treated consistently with the employer's tax memo?
• Is any development or state levy separately explained?
• Does your annualized gross pay match the monthly payroll figure?

To check the exact impact on your salary, use our Nigeria PAYE Calculator. Treat calculator output as a planning estimate and reconcile final payroll with your employer or tax adviser.

Implementation Timeline

• June 26, 2025: The four tax reform Acts were enacted.
• January 1, 2026: The Nigeria Tax Act and Nigeria Tax Administration Act are generally described as commencing from this date.
• 2026 payroll year: Employers should update PAYE engines, employee deduction evidence, rent-relief workflows and payroll explanations.
• First post-change annual cycle: Employees should keep payslips and relief evidence for annual returns or employer reconciliations.

If your employer has not yet updated your payslip or cannot explain which tax table it is using, raise the issue with HR or payroll. Ask for the PAYE band table, rent-relief evidence process and deductions list used in the payroll engine.

Sources Checked On June 17, 2026

• Presidential Fiscal Policy and Tax Reforms Committee official site
• Committee note on reliefs effective from January 1, 2026
• PwC Nigeria individual tax significant developments
• EY highlights of the Nigeria Tax Act, 2025
• Mercans personal income tax changes summary

For step-by-step calculation instructions with a worked example, see our companion article: How to Calculate PAYE Tax in Nigeria (2026 NTA Guide).