Nigeria Tax Act 2025: What Changed and How It Affects Your Salary in 2026

The Biggest Tax Reform in Decades

On 1 January 2026, the Nigeria Tax Act (NTA) 2025 came into effect, replacing the Personal Income Tax Act (PITA) that had governed how Nigerian workers are taxed for decades. This is the most significant change to personal income tax in Nigeria since the PITA amendments of 2011.

Whether you earn ₦100,000 or ₦10,000,000 per month, your take-home pay has changed. Here's exactly what happened and what it means for you.

Old System vs New System: Side by Side

The Old PITA System (Before 2026)

Under the old law, your taxable income was calculated after applying the Consolidated Relief Allowance (CRA):

• CRA = ₦200,000 OR 1% of gross income (whichever is higher) + 20% of gross income
• Then taxed at: 7%, 11%, 15%, 19%, 21%, 24% across six bands

The New NTA System (2026 Onwards)

Under the new law:

• No CRA — it's been abolished entirely
• Tax-free threshold of ₦800,000 (everyone's first ₦800,000 is taxed at 0%)
• New bands: 0%, 15%, 18%, 21%, 23%, 25%
• New Rent Relief: 20% of annual rent paid, up to ₦500,000

Who Benefits? Who Pays More?

Lower earners benefit significantly

If you earn ₦800,000 or less per year (about ₦67,000 per month or less), you now pay zero income tax. Under the old system, most of these workers still paid some tax after CRA was applied.

Middle earners: it depends

For salaries between ₦100,000 and ₦500,000 per month, the picture is mixed. The loss of CRA hurts some workers, but the ₦800,000 tax-free threshold and lower starting rates (15% vs the old 7-11-15% progression) can offset it. The key factor is whether you claim Rent Relief — if you pay rent and document it, you'll likely pay less than before.

Higher earners may pay slightly more

The top rate increased from 24% to 25%, and the old CRA provided significant relief for high earners. Without CRA, workers earning above ₦12,000,000 annually may see a modest increase.

The Rent Relief: Don't Miss This

The single most important thing you can do under the new law is claim your Rent Relief. Here's how it works:

• You can deduct 20% of your annual rent from your taxable income
• Maximum relief is ₦500,000 per year
• You need a valid tenancy agreement and proof of payment

For example, if you pay ₦1,500,000 in annual rent, your relief is ₦300,000 (20% of ₦1.5M). If you pay ₦3,000,000 or more, you get the maximum ₦500,000 relief.

This is free money you're leaving on the table if you don't claim it.

What You Should Do Now

1. Check your payslip: Does it reference CRA? If so, your employer may still be using the old calculation. Raise it with HR.

1. Calculate your correct tax: Use the MyTax Nigeria calculator to see what you should actually be paying under the new law.

1. Gather your rent documents: If you pay rent, get your tenancy agreement and rent receipts ready. This is your biggest potential saving.

1. Compare old vs new: Enter your salary on MyTax Nigeria to see exactly how the change affects your specific situation.

The Bottom Line

The NTA 2025 is generally good news for most Nigerian workers, especially those earning below ₦500,000 per month. The ₦800,000 tax-free threshold is a meaningful improvement, and the Rent Relief provides a new avenue for tax savings that didn't exist before.

The losers are high earners who benefited heavily from the old CRA formula, and anyone who doesn't claim their Rent Relief.

[Check Your 2026 Tax Now →](https://mytaxng.com/calculator)