The New PAYE Tax Law in Nigeria (2026): What You Actually Pay Now
Nigeria's tax system changed on 1 January 2026 under the Nigeria Tax Act 2025. New income-tax bands, bigger reliefs, and the tax office renamed from FIRS to the Nigeria Revenue Service (NRS). Here's the honest, plain-English version of what it means for your take-home pay — and how to work out your own number.
Not tax advice. This explains the law in general terms. Your exact tax depends on your reliefs and circumstances — confirm with the NRS or a tax professional, and check the figures are current when you read this.
The headline: low earners now pay zero
The biggest change is a wide 0% band. The first ₦800,000 of your chargeable income (what's left after reliefs) is taxed at nothing. Because of the reliefs below, most people earning up to about ₦1.2 million a year end up paying no income tax at all. The old "minimum tax" (1% of income) is abolished — it's replaced by this 0% band.
The 2026 income-tax bands
Tax applies to your chargeable income — gross pay minus your reliefs — in progressive slices:
| Chargeable income (per year) | Rate |
|---|---|
| First ₦800,000 | 0% |
| ₦800,001 – ₦3,000,000 | 15% |
| ₦3,000,001 – ₦12,000,000 | 18% |
| ₦12,000,001 – ₦25,000,000 | 21% |
| ₦25,000,001 – ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
Only the slice inside each band is taxed at that rate — earning into a higher band never makes your whole income cost more.
The reliefs that cut your chargeable income
- Pension: your 8% employee contribution is deducted before tax.
- Rent relief: 20% of the annual rent you pay, capped at ₦500,000 — a new relief that replaced the old consolidated allowance. Renters benefit; homeowners lean on the ₦800k 0% band.
- NHF: the 2.5% National Housing Fund contribution is now voluntary for private-sector workers.
- Life assurance premiums may also be deductible.
Work out your own take-home
Rather than do the bands by hand, put your salary into our Nigeria income-tax (PAYE) calculator — it applies the 2026 bands, pension and rent relief and shows your monthly take-home. Then plan what to do with it using the affordability calculator.
What else changed
- FIRS is now the NRS (Nigeria Revenue Service).
- From 1 January 2026, your NIN (individuals) or CAC number (businesses) replaces the TIN as your tax identifier.
- The ₦50 electronic-transfer levy (EMTL) on inflows of ₦10,000+ still applies — see Nigerian bank charges explained.
Frequently asked questions
Do I really pay no tax if I earn under ₦1.2m? Roughly — once pension and rent relief bring your chargeable income under ₦800,000, you fall in the 0% band. The exact threshold depends on your reliefs.
Is the rate on my whole salary? No. Nigeria uses progressive bands — each slice of income is taxed at its own rate, so moving into a higher band only taxes the extra naira, not everything.
Where do I file? Through the NRS TaxPro Max system. Employers deduct PAYE monthly; confirm your payslip reflects the new bands.
Educational information, not tax advice. Figures are from the Nigeria Tax Act 2025 (effective 1 January 2026) and may be updated — confirm current bands and reliefs with the NRS or a tax professional before relying on them.
