Personal Income Tax in Nigeria 2026: The New Bands, Rent Relief and What You Actually Pay

BusinessDay’s explainer, published on 14 January 2026, sets out the rate table below. Each rate applies only to the slice of income inside that band, not to your whole income. That point matters, because many people assume that crossing into a higher band taxes everything at the higher rate. It does not.

We found the full six-band table in one explainer only. The government’s own summary, which AllAfrica carried, confirms the exemption, the reduced PAYE rates for people earning up to ₦20 million a year and the rent relief. It does not list every band. So treat the upper bands as reported, and check them against the Nigeria Revenue Service or your employer’s payroll team before you plan around them.

You do not pay tax on your gross pay. First, the law lets you subtract certain items. Reports list these deductions:

The rent relief replaces the old consolidated relief allowance. As a result, tenants who can document their rent gain, while people who live in family homes or pay no rent do not receive it.

BusinessDay’s example follows an employee who earns ₦300,000 a month, or ₦3.6 million a year, and who pays ₦600,000 in annual rent. The article subtracts pension of ₦288,000, housing fund of ₦90,000 and rent relief of ₦120,000. That leaves ₦3,102,000 of chargeable income. The first ₦800,000 is untaxed. The next ₦2.2 million at 15 per cent gives ₦330,000. The remaining ₦102,000 at 18 per cent gives ₦18,360. The total is ₦348,360 a year, or about ₦29,030 a month.

However, the article applies the pension and housing deductions to gross pay, while it describes the housing fund as a share of basic salary elsewhere. Your payslip may therefore show a slightly different figure. The method is what you should copy, not the exact total.

Here is our arithmetic, using the published bands. Suppose someone earns ₦150,000 a month, which is ₦1.8 million a year, pays no rent and has only the 8 per cent pension deduction. The pension is ₦144,000, so taxable income is ₦1,656,000. The first ₦800,000 is free. The remaining ₦856,000 is taxed at 15 per cent, which gives ₦128,400 a year, or ₦10,700 a month. This is an illustration, not payroll advice, because your employer may apply other deductions.

Now take the smallest case in the reports. Someone who earns ₦70,000 a month has an annual gross pay of ₦840,000. After an 8 per cent pension deduction, taxable income falls to ₦772,800. That sits below ₦800,000, so the tax is zero.

Some articles say that people earning up to ₦800,000 a year pay nothing. Others say the figure is about ₦1.2 million in gross income. The two statements are consistent only if deductions take roughly ₦400,000 off a ₦1.2 million salary. The government summary says that gross income up to ₦1.2 million, or about ₦800,000 in taxable income, is fully exempt. In plain terms, the ₦800,000 band applies to taxable income, and the ₦1.2 million figure is an approximation of gross pay after typical deductions. We could not find the Act’s own wording to settle it, so we have not stated either number as a promise.

If you earn outside a payslip, nobody deducts tax for you. You may still owe it, and you should keep clean records of income and expenses. Our guide to small business records shows a simple system that works for tax time as well as for grants. The reforms also give small companies relief. According to the government summary, companies with turnover of ₦100 million or less and fixed assets of ₦250 million or less pay company income tax at 0 per cent, and firms with turnover of ₦100 million or less need not charge VAT. Eligible startups, and agricultural businesses with a five-year holiday, receive further relief. Our guide to the 2026 tax reforms for small businesses and workers covers the company side in more detail, and our explainer on the Tax ID in Nigeria shows how to get the number you will need. If you plan a venture, read our look at business ideas in electric mobility and then check which thresholds you will fall under.

Other changes touch your money as well. Gifts you receive are not taxed, and pensions paid under the Pension Reform Act are exempt. Compensation for losing a job is exempt up to ₦50 million. Banking rules still apply separately, so see our guide to bank charges in Nigeria for the fees that come out of your account.

Employers must apply the new rates from January 2026. If your payslip still shows the old method, raise it politely and in writing.

Do I pay tax if I earn the minimum wage? No. The government summary says people who earn the minimum wage or less are exempt. Our report on the minimum wage review covers the debate about changing that wage.

Does the rent relief apply automatically? No. You need a tenancy agreement or payment receipts.

Are gifts taxed? Reports say gifts received by individuals are no longer taxed.

Where do I confirm the rules? Use the Nigeria Revenue Service and your employer’s payroll team. Do not rely on social media posts.

Are you seeing the new rates on your payslip? Tell us in the comments what changed, without sharing your employer’s name or your tax number. We will update this page as the revenue authorities publish guidance. We last checked these figures on 17 October 2026, using BusinessDay and AllAfrica.

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Joy Murna Joshua is a Senior Correspondent for The Gazette News, covering major shifts across emerging technologies, national fiscal policies, and economic developments in Nigeria.… Read full bio →

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