PAYE in Nigeria from 2026: what changed for employers
From 1 January 2026, employment income in Nigeria is taxed under the Nigeria Tax Act 2025. If you run payroll, three things changed: the tax bands, the end of the Consolidated Relief Allowance (CRA) and a new rent relief.
The 2026 PAYE bands
- First ₦800,000 of taxable income a year: 0%
- Next ₦2,200,000 (up to ₦3m): 15%
- Next ₦9,000,000 (up to ₦12m): 18%
- Next ₦13,000,000 (up to ₦25m): 21%
- Next ₦25,000,000 (up to ₦50m): 23%
- Above ₦50,000,000: 25%
Each rate applies only to the slice of income inside its band. Someone earning ₦800,000 or less a year pays no income tax at all.
CRA is gone, rent relief is in
The old CRA (the higher of ₦200,000 or 1% of gross, plus 20% of gross) no longer applies. Instead, an employee who pays rent can claim 20% of the annual rent, up to ₦500,000, if they declare it.
Deductions that still reduce taxable income
- The employee's pension contribution (8% under the Pension Reform Act)
- National Housing Fund contributions, where they apply
- National Health Insurance contributions
- Life insurance premiums and interest on a loan for an owner-occupied home
A worked example
An employee earns ₦3,600,000 a year and pays ₦1,200,000 rent. Pension at 8% is ₦288,000. Rent relief is 20% of ₦1,200,000, which is ₦240,000. Taxable income is ₦3,600,000 minus ₦528,000, which is ₦3,072,000.
Tax: the first ₦800,000 at 0%, the next ₦2,200,000 at 15% (₦330,000) and the remaining ₦72,000 at 18% (₦12,960). Annual PAYE is ₦342,960, or ₦28,580 a month.
Work it out in seconds
Use our free PAYE calculator to try any salary. When you're ready to stop doing it by hand, Profynix prepares payroll before payday with deductions and payslips ready, and nobody is paid until you approve.
This guide is general information, not tax advice. Check the Nigeria Revenue Service and your state's revenue service, or ask your accountant, for your situation.