Personal Income Tax in Nigeria: Rates, PAYE and Reliefs
A plain guide to personal income tax: the rate bands, the reliefs you can claim, and what is exempt or taxed at source.
Based on the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, in force from 1 January 2026.
In 30 seconds
An individual pays income tax on taxable income after allowed deductions. The first N800,000 is taxed at 0%. The rates then climb through 15%, 18%, 21% and 23% to 25% on income above N50,000,000 (section 58 and the Fourth Schedule).
An individual earning the minimum wage is outside these rates. A rent relief of 20% of rent paid, up to N500,000, can reduce taxable income (section 30(2)(a)(vi)).
0%On the first N800,000
25%Top rate, above N50 million
20%Rent relief, capped at N500,000
6 bandsIn the Fourth Schedule
Who pays
A resident individual is taxed on income, gains and profits wherever they arise. It does not matter whether they are brought into Nigeria (section 12).
Employment income counts as Nigerian where the employee is resident in Nigeria. It also counts where the duties are done wholly or partly in Nigeria and the pay is not properly taxed in the employee's home country (section 13).
The Twelfth Schedule decides residence for a year. It looks mainly at where the individual has a place of residence on 1 January.
What counts as income
Taxable income is the total of five kinds of income (section 28(2)).
Profits from a trade, business, profession or vocation.
Employment income, including salaries, bonuses, allowances and benefits.
Income from investing activities.
Profits or income from any other source.
Chargeable gains from disposing of chargeable assets.
The Act then takes off losses, capital allowances, exempt income and income on which tax withheld at source is the final tax.
Benefits in kind
An employer may give a benefit other than living accommodation. If the employer's own asset is used, the employee is treated as earning 5% of its cost each year. If the employer pays rent or hire, the employee is treated as earning that amount (section 14).
Personal income tax rates in Nigeria
The Fourth Schedule applies these rates to taxable income, after the deductions in section 30.
Slice of taxable income
Rate
First N800,000
0%
Next N2,200,000
15%
Next N9,000,000
18%
Next N13,000,000
21%
Next N25,000,000
23%
Above N50,000,000
25%
Each rate applies only to its own slice. Income is not taxed at the top rate just because it reaches it.
A worked example
Take taxable income of N5,000,000.
Slice
Rate
Tax
First N800,000
0%
N0
Next N2,200,000
15%
N330,000
Remaining N2,000,000
18%
N360,000
Total
N690,000
That is an average rate of 13.8% on the taxable income.
Deductions and reliefs
Section 30(2) lists the payments that reduce chargeable income.
Contributions to the National Housing Fund.
Contributions to the National Health Insurance Scheme.
Contributions under the Pension Reform Act.
Interest on a loan to develop an owner-occupied home.
Premiums on life insurance or a deferred annuity, for you or your spouse.
Rent relief of 20% of annual rent, up to N500,000. You must declare the actual rent and other details the tax authority asks for.
You must claim in writing (section 31). The authority can ask for proof and refuse a claim without it (section 32).
How to calculate PAYE in Nigeria
PAYE means Pay As You Earn. It is income tax that an employer deducts from pay each month and remits to the tax authority.
Work out the year's gross pay, including bonuses and taxable benefits.
Take off the reliefs in section 30(2), such as pension contributions and rent relief.
Apply the bands in the Fourth Schedule to the taxable income.
Divide the annual tax by 12 to get the monthly PAYE.
A worked example
An employee earns N8,000,000 a year. Pension contributions are N640,000. Annual rent is N1,500,000, so rent relief is 20%, or N300,000. That is below the N500,000 cap.
Step
Amount
Gross pay for the year
N8,000,000
Less pension contributions
(N640,000)
Less rent relief
(N300,000)
Taxable income
N7,060,000
Tax on the first N800,000 at 0%
N0
Tax on the next N2,200,000 at 15%
N330,000
Tax on the remaining N4,060,000 at 18%
N730,800
Annual tax
N1,060,800
Monthly PAYE (annual tax divided by 12)
N88,400
This is an illustration. Your own pay package and reliefs will differ.
Minimum wage earners
section 58 sets the Fourth Schedule rates for every individual other than one who earns the minimum wage under the Minimum Wage Act. A minimum wage earner is outside those rates.
Tax withheld at source
Some income is taxed by deduction at source, and that deduction can be the final tax. Income of that kind is taken out of total income (section 28(2)(b)(iv)). See the withholding tax guide.
Compensation for loss of office
Compensation of up to N50,000,000 for loss of office or for personal injury is not a chargeable gain. Only the excess is taxed. The payer must deduct and remit the tax due at the point of payment (section 50).
Gains, homes and personal items
Main home: gains on a dwelling-house and up to one acre of adjoining land are exempt. The relief can be used once in a lifetime (section 51).
Personal chattels: a gain is not chargeable if the total consideration in the period does not exceed N5,000,000, or three times the annual minimum wage, whichever is higher (section 52).
No records, no problem?
Not quite. If a person's income cannot be worked out, or proper records are not kept, the Minister can assess the person under a presumptive tax regime (section 29).
Filing and paying
Dates and penalties come from the Nigeria Tax Administration Act and its regulations. The NRS tax calendar sets PAYE for the 10th of the month after deduction. Personal tax for most individuals is administered by the State Internal Revenue Service.
PAYE: employers remit by the 10th of the month after deduction.
Employer annual return: by 31 January, as reported.
Self-assessed individuals: an annual return, commonly applied as 31 March.
Late filing: N100,000 for the first month and N50,000 for each month after, as reported.
Consolidated relief allowance: is it still available?
The old Personal Income Tax Act gave a consolidated relief allowance. Section 195 repeals that Act.
The list of eligible deductions in section 30(2) has no consolidated relief allowance. It adds rent relief of 20% of rent paid, up to N500,000. Read the list in full before you file.
Common mistakes
Claiming rent relief without keeping proof of the rent paid.
Forgetting to claim reliefs in writing.
Treating withheld tax as final when it is only an advance payment.
Ignoring benefits in kind from an employer.
Frequently asked questions
What are the personal income tax rates in Nigeria in 2026?
0% on the first N800,000, then 15%, 18%, 21% and 23%, and 25% above N50,000,000 (section 58, Fourth Schedule).
Who is exempt from personal income tax?
An individual earning the minimum wage is outside the rates in section 58. Some income is also exempt under the Act, and some is taxed finally at source.
How much is the rent relief?
20% of the annual rent paid, up to N500,000, whichever is lower. You must declare the actual rent and give the details the tax authority asks for (section 30(2)(a)(vi)).
Is pension contribution deductible?
Yes. Contributions under the Pension Reform Act are an eligible deduction (section 30).
Is compensation for loss of office taxed?
The first N50,000,000 is not a chargeable gain. Only the excess is taxed (section 50).
Do I pay tax when I sell my house?
Gains on your dwelling-house and up to one acre of adjoining land are exempt, once in a lifetime (section 51).
When must I file my personal tax return?
The Act does not fix a date for individuals. It is commonly applied as 31 March. Confirm with your tax authority.
How is PAYE calculated in Nigeria?
Take the year's pay, subtract the reliefs in section 30(2), apply the Fourth Schedule bands to the taxable income, then divide the annual tax by 12.
Is the consolidated relief allowance still available?
The Personal Income Tax Act that gave it is repealed (section 195). The deductions in section 30(2) do not list it. They include rent relief of 20% of rent, up to N500,000.
These are the sections this guide relies on, as published in the Official Gazette. Open any one to read it.
Section 12 Resident individual
The income, gains or profits of an individual who is a resident of Nigeria are deemed to accrue in Nigeria and are chargeable to tax in Nigeria wherever they arise, and whether or not the income, profits or gains have been brought into or received in Nigeria.
The income, gain or profit from an employment shall be deemed to be derived from Nigeria where —
(a)
the employee is a resident of Nigeria ; or
(b)
the duties of the employment are wholly or partly performed in Nigeria and the remuneration is accruing to the employee while in Nigeria is not duly liable to tax in the employee's country of tax residence.
(2)
The grains or profits from an employment by a Government in Nigeria shall be deemed to be derived from Nigeria wherever the remuneration is paid if the employee performs the duties of that employment in a country other than Nigeria which under an agreement or diplomatic privilege exempts the employee from tax on those gains or profits.
Where an employer incurs an expense in the provision of any benefit or perquisite, other than the provision of living accommodation to which this section relates, the following provisions shall apply —
(a)
where any asset belonging to the employer is used wholly or partly in the making of such provisions, the employee is deemed to have earned annual benefit of an amount equal to 5% of the amount expended by the employer in acquiring the asset, but if that amount cannot be so ascertained, 5% of the market value of the asset at the time of the acquisition, as may be determined by the relevant tax authority ;
(b)
where any sum by way of rent or hire is payable by the employer in respect of any such asset, the employee is deemed to have earned annual benefit of an amount equal to the annual amount of the rent or hire payable by the employer on the asset ; and
(c)
in any other case, the employee is deemed to have earned annual benefits equal to the annual amount expended by the employer in connection with the benefit thereon.
(2)
The amount of benefit under subsection (1)(a) shall be reduced by so much of any expense made by the employee in respect thereon.
(3)
The provisions of this section shall not apply to any expenses incurred by an employer —
(a)
in connection with the provision of meals in any canteen in which meals are provided for the staff generally or meal vouchers for employees;
(b)
in the provision of any uniform, overall or other protective clothing, work tools or work equipment ; or
(c)
in connection with change in place of residence of the employee by reason of a change of the employee's employment or place of exercising the employment.
(4)
A reference in this subsection to expenses incurred in connection with any matter includes a reference to a proportion of any expenses incurred partly in connection with that matter.
(5)
A reference in this section to anything provided for an employee shall, unless the reference is expressly to something provided for the employee, be construed as including a reference to anything provided for the spouse, family, servant, dependant or guest of that employee by the employer.
(6)
Where premises in Nigeria are made available by an employer to the employee, the spouse or family, and the employee —
(a)
pays no rent for the premises; or
(b)
pays a rent less than the annual rental value of the premises, the employee shall be treated as being in receipt of additional emoluments equal to the annual rental value of the premises, subject to a maximum of 20% of annual gross income from the employment, excluding the rental value.
(7)
In this section, "annual value of the premises" means —
(a)
in relation to premises that are subject to a law governing assessment of local rates, the annual rental value of the premises as determined for the purposes of local rates under that law ;
(b)
in any other case, the annual rental value as determined by the relevant tax authority ; and
(c)
a reference in this section to annual value shall include a reference, where applicable, to such proper proportion of the annual value in relation to —
(i)
a period of occupation within a year,
(ii)
the part of the premises occupied, or
(iii)
both a period of occupation within a year and the part of the premises occupied, as may be determined by the relevant tax authority.
The total income of an individual for any year of assessment is the taxable income less total deduction.
(2)
For the purposes of subsection (1) —
(a)
taxable income is the aggregate amount of —
(i)
assessable profits from trade, business, profession or vocation ascertained in accordance with Part V of Chapter Two of this Act,
(ii)
employment income,
(iii)
income from investing activities,
(iv)
profits or income from any other source, and
(v)
chargeable gains from the disposal of chargeable assets ; and
(b)
total deduction is the sum of —
(i)
any loss ascertained in accordance with subsection (2),
(ii)
capital allowance in accordance with the provisions of Part I of the First Schedule to this Act,
(iii)
income of the individual that is exempt from tax under this Act, and
(iv)
income of the individual on which the tax deducted at source under section 51 of Nigeria Tax Administration Act is the final tax.
(3)
The loss to be deducted in arriving at the total income of an individual is —
(a)
the amount of a loss incurred by the individual during the year or preceding year of assessment in a trade, business, profession or vocation ; and
(b)
the amount of loss incurred on the disposal of a chargeable asset:
Provided that —
(i)
in no circumstances shall the aggregate loss deductions from income exceed the amount of that loss,
(ii)
the loss shall be deducted as far as possible from assessable profit of a trade, business, profession or vocation of the first year of assessment after that in which the loss was incurred, and in subsequent years until the loss is fully recouped,
(iii)
the loss incurred during any year of assessment shall be computed, in accordance with the basis period contained in Part V of Chapter Two of this Act, and
(iv)
any loss incurred in any period from sales, disposal or any other transaction in digital or virtual assets shall only be deductible against the profit or gain from digital or virtual assets.
Notwithstanding any provisions of Chapter Two of this Act, where for all practical purposes, the income of a person chargeable to tax under this Act cannot be ascertained or records are not kept in such a manner as to enable proper assessment of income, then such person shall be assessed on such terms and conditions as may be prescribed by the Minister on the advice of the Joint Revenue Board in a regulation under a presumptive tax regime.
Section 30 Ascertainment of chargeable income of individuals
(1)
The chargeable income of an individual, is the total income of that individual ascertained under the provisions of section 28 of this Act, less eligible deductions.
(2)
For the purposes of this section —
(a)
"eligible deductions" include payments made by the individual in a year of assessment in respect of —
(i)
the individual's contributions under the National Housing Fund,
(ii)
the individual's contributions under the National Health Insurance Scheme,
(iii)
the individual's contributions under the Pension Reform Act,
(iv)
interest on loans for developing an owner-occupied residential house,
(v)
annual amount of any annuity or premium paid by the individual during the year preceding the year of assessment in respect of insurance on his life or the life of his spouse, or contract for a deferred annuity on his own life or the life of his spouse ;
(vi)
rent relief of 20% of annual rent paid, subject to a maximum of N500,000, whichever is lower, provided that the individual accurately declares the actual amount of rent paid and other relevant information as may be prescribed by the relevant tax authority ; and
(b)
"total income" means total income as specified in section 28 of this Act.
Deduction shall not be allowed under this Part to any person for a year of assessment, unless claimed in writing in such form as the relevant tax authority may prescribe.
The relevant tax authority may require a claimant to a deduction under section 30 (2) (a) of this Act to produce such documentary evidence as may be necessary in support of any claim and in the absence of such evidence, or where such evidence is inadequate, the relevant tax authority may refuse to allow the deduction or such part of the amount claimed.
(2)
Notwithstanding any provision of this Part, where —
(a)
an individual fails to produce satisfactory documentary evidence in support of a claim under section 30 (2) (a) of this Act, any objection to an assessment or, to any rate at which tax is to be deducted, shall be accompanied by a copy of the available documentary evidence or a declaration that such required documentary evidence does not exist; and
(b)
an individual claims a deduction under this Act for a year of assessment, or produces evidence in support of a claim previously made but not admitted or not admitted in full by the relevant tax authority, such repayment, set-off of tax or reduction in any assessment shall be made so as to give effect to any amount or additional amount of the deduction as appropriate.
Sums not exceeding N50,000,000 obtained by way of compensation or damages for any wrong or injury suffered by an individual in his person or in his profession or vocation, including compensation for loss of office or employment, wrong or injury for libel, slander or enticement shall not be chargeable gains.
(2)
Where the sum exceeds N50,000,000, only the excess amount shall constitute a chargeable gain.
(3)
For the purposes of subsection (1) and (2) of this section, any person who pays compensation for loss of office or employment to an individual is required, at the point of payment of such compensation, to deduct and remit the tax due under this section to the relevant tax authority.
(4)
The tax so deducted shall be remitted within the time specified under the Pay-As-You-Earn or Deduction of Tax at Source Regulations issued the Nigeria Tax Administration Act.
The gains accruing to an individual are exempt from tax in respect of the disposal of, or an interest in —
(a)
a dwelling-house or part of such dwelling-house ; and
(b)
land, other than land used for commercial purposes, immediately adjoining the dwelling house up to a maximum of one acre.
(2)
The exemption under this section shall be enjoyed once in the lifetime of an individual.
(3)
The consideration shall be apportioned where a person disposes of only a part of a dwelling-house or a house used partly as dwelling place and partly for carrying out a trade, business, profession or vocation.
A gain accruing on a disposal of an asset which is tangible movable property being personal chattels of an individual shall not be a chargeable gain if the total amount or value of the consideration for the disposal does not, in a period of assessment, exceed N5,000,000 or three times the annual national minimum wage, whichever is higher.
(2)
Where two or more assets, whether or not forming part of a set of articles, are disposed by a person to the same person or to persons acting in concert or to connected persons, whether on the same or different occasions, the two or more transactions shall be treated as a single transaction disposing of a single asset, but with any apportionments, where necessary.
(3)
Where the disposal is part of a right or interest in, or over tangible movable property, subsection (1) of this section shall apply in relation to the asset as a whole, taking the consideration as including the market value of what remains undisposed of, in addition to the actual consideration.
(4)
The provisions of this section shall apply to a gain accruing on a disposal of two or more assets, not necessarily forming part of a set of articles of any description, which are tangible movable properties in the same manner as they apply in relation to a gain accruing on a disposal of an asset, or two or more assets forming part of a set of articles.
(5)
This section shall not apply to a disposal of currency of any description.
The income tax payable on the chargeable income of an individual, other than an individual earning the Minimum Wage in line with the Minimum Wage Act, in respect of each year of assessment, shall be as specified in the Fourth Schedule to this Act.
Dates and penalties come from the Nigeria Tax Administration Act and the NRS tax calendar; some points are as reported. Source for the Act: Nigeria Tax Act, 2025 (Act No. 7 of 2025), Official Gazette No. 117, Lagos, 26 June 2025. General information, not tax or legal advice.