Key Highlights
- ₦800k and below = Tax-free. If you earn less than ₦800,000 per year, you pay nothing.
- Progressive rates up to 25%. Higher earners pay more, but the maximum rate is 25% (up from 24% in the old system).
- CRA is gone. The old Consolidated Relief Allowance has been discontinued.
- Rent relief is new. You can claim up to 20% of your annual rent (maximum ₦500k) as a deduction.
- VAT on essentials removed. Food, education, and healthcare attract 0% VAT.
- No auto-debit. The government will not automatically deduct money from your account.
The Nigeria Tax Act 2025 (NTA 2025) represents the most significant overhaul of Nigeria's tax system in decades. Signed into law by President Bola Ahmed Tinubu on June 26, 2025, and effective from January 1, 2026, this new law consolidates multiple tax legislations into a single, unified statute.
If you're wondering how your salary will be affected, we've built a free tax calculator that shows you exactly how much you'll keep and how much goes to tax.
What is the NTA 2025?
The Nigeria Tax Act 2025 consolidates several existing tax laws into one comprehensive framework:
- Personal Income Tax Act (PITA)
- Companies Income Tax Act (CITA)
- Petroleum Profits Tax Act (PPTA)
- Value Added Tax Act (VAT)
- Capital Gains Tax Act (CGT)
The goal is to simplify compliance, broaden the tax base, and make the system fairer for everyone, especially low-income earners.
The New Tax Brackets
Under the NTA 2025, personal income tax follows a progressive structure with six brackets:
| Annual Income | Tax Rate |
|---|---|
| ₦0 - ₦800,000 | 0% (Tax-Free) |
| ₦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% |
Important: These rates apply to your taxable income after deductions like pension and rent relief.
Who Doesn't Pay Tax?
The biggest news for everyday Nigerians: if you earn ₦800,000 or less per year (about ₦67,000 per month), you pay zero income tax.
This ₦800k threshold is a complete exemption, not just a deduction. It's designed to protect low-income workers from the tax burden.
Note on minimum wage: The current minimum wage is ₦70,000/month (₦840,000/year). This means minimum wage earners will pay a small amount of tax (about ₦6,000 per year or ₦500 per month) on the ₦40,000 above the threshold.
What Changed from the Old System?
Consolidated Relief Allowance (CRA): ABOLISHED
Under the old Personal Income Tax Act, you could claim a CRA of:
- ₦200,000 fixed, plus
- 20% of your gross income
This has been completely removed. Instead, the new ₦800k tax-free threshold provides relief for lower earners, while higher earners face slightly simplified (but potentially higher) rates.
Rent Relief: NEW
A new rent relief system has been introduced:
- Relief amount: 20% of your annual rent paid
- Maximum cap: ₦500,000
Example: If you pay ₦1,200,000 in rent per year, your relief is ₦240,000 (20% × ₦1.2M). This amount is subtracted from your taxable income before tax is calculated.
Pension Contributions: Still Tax-Free
Pension contributions remain tax-deferred:
- Standard contribution: 8% of your salary
- This amount is deducted from your taxable income
- You only pay tax on it when you withdraw after retirement
Will I Pay More or Less Tax?
For most Nigerians, the answer is less or nothing at all. Here's how different income levels are affected:
| Monthly Salary | Old System (Est.) | New NTA 2025 | Change |
|---|---|---|---|
| ₦50,000 | ~₦0 | ₦0 | Same |
| ₦100,000 | ~₦8,000 | ~₦3,500 | -56% |
| ₦300,000 | ~₦30,000 | ~₦28,000 | -7% |
| ₦500,000 | ~₦75,000 | ~₦63,000 | -16% |
| ₦1,000,000 | ~₦175,000 | ~₦143,000 | -18% |
Note: These are estimates. Use our tax calculator for your exact figures.
What About Investments?
If you make money from selling stocks, crypto, or other investments, here's what you need to know:
- Capital gains are now taxed at your marginal income tax rate (0% to 25%), not a flat 10%
- Low earners benefit: If your total income is below ₦800k, capital gains are also tax-free
- No auto-debit: You report and pay this yourself when you file your annual return
Filing Deadlines
Important dates to remember:
| Tax Type | Deadline |
|---|---|
| Personal Income Tax | March 31st |
| Employer PAYE Returns | January 31st |
| Companies Income Tax | 6 months after financial year end |
| VAT Returns | 21st of the following month |
How to Calculate Your Tax
The easiest way is to use our Nigeria Tax Calculator. Here's what it does:
- Enter your annual or monthly salary
- Add your annual rent (for rent relief)
- Set your pension contribution %
- See your exact take-home pay, tax amount, and effective tax rate
The calculator uses the official NTA 2025 brackets and shows you a detailed breakdown of how your tax is calculated across each bracket.