Frequently Asked Questions
What are the income tax rates in Nigeria for 2026?
Nigeria has 6 progressive income tax brackets for 2026 under the new NTA 2025: 0% (first ₦800,000 - tax free), 15% (₦800,001-₦3,000,000), 18% (₦3,000,001-₦10,000,000), 21% (₦10,000,001-₦25,000,000), 23% (₦25,000,001-₦50,000,000), and 25% (above ₦50,000,000). The top rate of 25% is lower than the previous 24% but with a higher threshold.
What is the tax-free threshold in Nigeria for 2026?
Under the Nigeria Tax Act (NTA) 2025, the first ₦800,000 of annual income is completely tax-free. This is triple the previous threshold of ₦300,000, providing significant relief for lower and middle-income earners. Monthly, this means the first ₦66,667 is untaxed.
What is the pension contribution rate in Nigeria?
Employees contribute 8% of their gross salary to pension, while employers contribute 10%, for a total of 18%. Pension is calculated on "pensionable emoluments" which typically includes Basic Salary + Housing Allowance + Transport Allowance. Pension contributions are deducted before tax is calculated.
What changed with the Nigeria Tax Act 2025?
The NTA 2025, signed by President Tinubu in June 2025 and effective January 1, 2026, introduces major reforms: the tax-free threshold was tripled from ₦300,000 to ₦800,000; the Consolidated Relief Allowance (CRA) was abolished and replaced with rent relief (20% of rent up to ₦500,000); a simplified 6-bracket progressive system was introduced; digital assets and gratuity are now taxable; and FIRS is transitioning to the Nigeria Revenue Service (NRS) with AI-driven compliance tools.
What is the minimum wage in Nigeria for 2026?
The national minimum wage in Nigeria is ₦70,000 per month (₦840,000 annually), effective from May 2024. Employees earning the minimum wage or less are exempt from income tax under NTA 2025. This exemption means approximately 50% of Nigerian workers pay no income tax at all.
How is PAYE calculated in Nigeria under NTA 2025?
PAYE (Pay As You Earn) is calculated by: 1) Starting with gross salary, 2) Deducting pension contribution (8%), 3) Applying progressive tax rates to the "chargeable income" - the first ₦800,000 is tax-free, then rates of 15%, 18%, 21%, 23%, and 25% apply to successive income bands. Rent relief may also reduce chargeable income if applicable.
Is the National Housing Fund (NHF) still mandatory in Nigeria?
Under NTA 2025, NHF contributions (2.5% of basic salary) are now voluntary for private sector employees. Previously, all employees earning ₦30,000+ per year were required to contribute. Public sector employees may still be required to contribute. NHF is remitted to the Federal Mortgage Bank of Nigeria to help with housing loans.