Guide · Nigeria Tax Act 2025, effective 1 January 2026
Nigeria Tax Act 2025/2026 — What HR & Payroll Teams Need to Know
What changed on 1 January 2026
From 1 January 2026, Nigerian payroll runs under the Nigeria Tax Act 2025. The Consolidated Relief Allowance is gone, replaced by a capped rent relief. The first ₦800,000 of annual income is tax-free, with progressive rates from 15% to 25% above it. Minimum tax is abolished, NHF is voluntary for private-sector employees, and the Nigeria Revenue Service now checks remittances with data analytics rather than waiting for an audit visit. This guide covers each change and what it demands from your payroll process.
One detail most summaries miss: the Act applies prospectively. Anything relating to the 2025 tax year — a late correction, a re-run, a back-pay computation — must still use the old PITA rules, while 2026 periods use the NTA. A payroll system therefore needs its statutory rules versioned by tax year, not simply overwritten. KoboHR keeps each year's configuration separate for exactly this reason.
From PITA to NTA — side by side
| Topic | Under PITA (to 2025) | Under NTA (from Jan 2026) |
|---|---|---|
| Core relief | CRA: ₦200,000 or 1% of gross, + 20% of gross | Abolished — replaced by rent relief |
| Rent relief | — | Lower of 20% of annual rent or ₦500,000 |
| Bands | 7%–24% ladder | 0% / 15% / 18% / 21% / 23% / 25% |
| Zero band | — | First ₦800,000 annual |
| Minimum tax | 1% of gross | Abolished |
| NHF (private sector) | Deducted by default | Voluntary opt-in, 2.5% of basic |
| Enforcement | Manual audit emphasis | NRS data analytics |
The new PAYE bands
| Annual chargeable income | Rate | Monthly equivalent | Note |
|---|---|---|---|
| First ₦800,000 | 0% | First ₦66,666.67 | Zero band — no PAYE |
| Next ₦2,200,000 (to ₦3,000,000) | 15% | To ₦250,000.00 | |
| Next ₦9,000,000 (to ₦12,000,000) | 18% | To ₦1,000,000.00 | |
| Next ₦13,000,000 (to ₦25,000,000) | 21% | To ₦2,083,333.33 | |
| Next ₦25,000,000 (to ₦50,000,000) | 23% | To ₦4,166,666.67 | |
| Above ₦50,000,000 | 25% | Above ₦4,166,666.67 | Top marginal rate |
The bands apply to chargeable income — gross annual income after reliefs — and they are marginal: each rate taxes only the slice inside its band. You can calculate any salary under the NTA 2026 bands live, with the band-by-band breakdown shown.
Reliefs under the NTA
Rent relief
The lower of 20% of annual rent or ₦500,000, replacing the CRA. It requires verifiable documentation — a tenancy agreement or rent receipts — and that means HR must capture each employee's annual rent in the employee profile before payroll can apply it. No documents, no relief.
Pension
The employee's 8% of basic, housing and transport remains tax-deductible. The employer's 10% is unchanged — a contribution the company pays, not a payslip deduction.
NHF
2.5% of basic salary, now a voluntary opt-in for private-sector employees. Where an employee has opted in, the contribution is deductible before banding.
What's gone
The CRA and the 1% minimum tax are both abolished. Employees earning the national minimum wage or below are exempt from PAYE entirely.
What this means operationally for HR and payroll
- Rent data becomes a payroll input HR must collect, validate, and keep documented — a new field with audit consequences.
- Per-employee NHF flags replace a blanket deduction; deducting NHF from an employee who never opted in is an unlawful deduction.
- Payroll engines need per-tax-year configuration — a 2025 correction must re-run under 2025 rules, not whatever is current.
- NRS data analytics means arithmetic discrepancies surface without an auditor visiting. Precision is now a compliance property, not a nicety.
How KoboHR implements the NTA
- Statutory rules live in versioned, per-year configuration — every payrun is stamped with the config version that produced it.
- Rent relief, NHF opt-in, and pension are handled per employee, not per company.
- Every payslip line is traceable to the rule, rate, and basis that produced it.
- Parallel-run a month against your current process and compare every kobo before switching.
Go deeper with the full list of statutory deductions, the step-by-step payroll guide for HR, or the Nigeria payroll FAQ.
See the NTA 2026 rules running on a real payroll — every band, every relief, every statutory line.
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