What Changed in 2026
The Nigeria Tax Act 2025 (effective January 1, 2026) is the biggest overhaul of Nigerian taxation in decades. Here's what's different:
Tax-Free Threshold
Before
₦0 (no tax-free amount)
After
₦800,000/year is now tax-free
Impact: If you earn under ₦800K, you pay zero income tax
Tax Brackets Simplified
Before
6 brackets from 7% to 24%
After
6 brackets from 0% to 25%
Impact: Most people pay less, high earners pay slightly more
Rent Relief (NEW)
Before
No rent deduction
After
Deduct 20% of rent, up to ₦500,000
Impact: Renters can reduce taxable income significantly
CRA Eliminated
Before
Consolidated Relief Allowance (complex formula)
After
Replaced by simpler rent relief system
Impact: Easier to calculate, more transparent
VAT Threshold Raised
Before
₦25 million turnover = must register for VAT
After
₦50 million turnover threshold
Impact: Fewer small businesses need to deal with VAT
Development Levy
Before
Multiple levies (NITDEF, NASENI, etc.)
After
Single 4% Development Levy (reducing to 2% by 2030)
Impact: Simplified for businesses, but new obligation
Who Needs to Pay Tax in Nigeria?
Simple answer: If you earn money in Nigeria, you likely have tax obligations. But the amount—and whether you actually owe anything—depends on your situation.
Employed (Salary Earners)
- Your employer deducts PAYE from your salary
- You may still need to file an annual return
- You can claim additional deductions (like rent relief)
Self-Employed / Freelancers
- You're responsible for calculating and paying your own tax
- Must file annual returns
- Can deduct business expenses
Business Owners
- Company Income Tax (CIT) for registered companies
- Exemption: Companies with ≤₦100M turnover pay 0% CIT
- Still need to handle employee PAYE if you have staff
Content Creators
- AdSense, sponsorships, affiliate income = taxable
- Foreign income is taxable if you're a Nigerian resident
- Can deduct equipment, software, etc.
Not sure about your situation? Use our free calculator → to find out if you owe tax.
2026 Nigerian Tax Brackets (PAYE)
| Annual Taxable Income | Tax Rate |
|---|---|
| ₦0 - ₦800,000 | 0% |
| ₦800,001 - ₦3,000,000 | 15% |
| ₦3,000,001 - ₦12,000,000 | 18% |
| ₦12,000,001 - ₦25,000,000 | 21% |
| ₦25,000,001 - ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
How it works (marginal rates)
These are marginal rates. You don't pay 18% on all your income—you pay 0% on the first ₦800K, then 15% on the next portion, and so on.
Example: ₦5,000,000 Annual Income
Rent Relief: The New Deduction Everyone Should Claim
New in 2026: You can deduct 20% of your annual rent from your taxable income, up to a maximum of ₦500,000.
How to calculate:
Annual rent × 20% = Your rent relief
Maximum: ₦500,000
| Annual Rent | 20% | Relief You Get |
|---|---|---|
| ₦500,000 | ₦100,000 | ₦100,000 |
| ₦1,500,000 | ₦300,000 | ₦300,000 |
| ₦2,500,000 | ₦500,000 | ₦500,000 (max) |
| ₦5,000,000 | ₦1,000,000 | ₦500,000 (capped) |
Who qualifies:
- Anyone who pays rent for their primary residence
- Must have proof (rent receipts, tenancy agreement)
- Cannot claim if you own your home or live rent-free
Tax Savings Example
If you earn ₦5M/year and pay ₦2.5M in rent:
Tax Deductions for Nigerians in 2026
Statutory Deductions (automatic for employees):
8%
Pension
2.5%
NHF
5%
NHIS
Fully Deductible
Partially Deductible
Not Deductible
Pro tip: Keep receipts for everything. FIRS can request proof of deductions during an audit.
Tax Filing Deadlines in 2026
PAYE (Employees)
Who: All salary earners • What: Annual tax return
Self-Assessment
Who: Self-employed, freelancers • What: Annual return + payment
VAT Returns
Who: VAT-registered businesses (>₦50M turnover) • What: Monthly VAT filing
Company Income Tax
Who: Registered companies • What: Annual company tax return
Penalties
Late Filing:
- • First month: ₦50,000
- • Each additional month: ₦25,000
- • Example: 3 months late = ₦100,000
Late Payment:
- • Penalty: 10% of tax owed
- • Interest: Central Bank rate (~27%)
False Returns:
- • Penalty: 100% of tax underpaid
- • Possible prosecution
Don't let penalties eat your profits. Set up free reminders with KeepAm →
How to File Your Nigerian Tax Return
Get Your TIN
Tax Identification Number required for all filings. Get yours at FIRS office, Joint Tax Board, or via FIRS TaxPro Max online.
Gather Your Documents
Payslips/income records, expense receipts, rent receipts (for rent relief), and previous year's tax returns.
Calculate Your Tax
Use KeepAm calculator or FIRS forms. Determine taxable income and apply correct rates.
File Your Return
Online via FIRS TaxPro Max (taxpromax.firs.gov.ng), physical submission at your state tax office, or via a registered tax practitioner.
Pay Any Tax Owed
Bank payment with Remita code or online payment via TaxPro Max.
Keep Your Records
Store receipts and returns for 6 years. FIRS can audit up to 6 years back.
KeepAm generates filing-ready reports with all the numbers you need. See how it works →
Tax Guidance for Specific Situations
Frequently Asked Questions
Download This Guide as PDF
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