Nigeria 2026 Tax Reform: What Changed and How It Affects You

On 1 January 2026, the Nigeria Tax Act (NTA) 2025 came into effect, fundamentally changing how individuals and businesses pay tax in Nigeria. This single law replaces the Personal Income Tax Act (PITA), the Companies Income Tax Act (CITA), and several other tax statutes with a unified framework.

The biggest change: new tax bands for individuals

Under the old PITA, personal income tax used six graduated bands ranging from 7% to 24%. The NTA 2025 replaces these with wider, simpler bands that are more progressive:

First ₦800,000: 0% (completely tax-free). ₦800,001 to ₦3,000,000: 15%. ₦3,000,001 to ₦12,000,000: 18%. ₦12,000,001 to ₦25,000,000: 21%. ₦25,000,001 to ₦50,000,000: 23%. Above ₦50,000,000: 25%.

This means anyone earning ₦800,000 or less per year pays zero income tax — exempting roughly 90% of Nigerian workers from PAYE deductions.

CRA is abolished — rent relief replaces it

The Consolidated Relief Allowance (CRA), which gave everyone a flat deduction of ₦200,000 plus 20% of gross income, is gone. In its place, the NTA introduces Rent Relief: you can deduct 20% of your annual rent paid, capped at a maximum of ₦500,000 per year.

To claim rent relief, you need documentation — tenancy agreements, receipts, and proof of payment. If your employer provides accommodation, no rent relief applies.

Pension contributions remain deductible

The standard 8% employee pension contribution (calculated on Basic + Housing + Transport allowances) is still deductible from taxable income. Other statutory deductions like NHIS, NHF, and life insurance premiums also remain allowable with proper documentation.

Minimum tax abolished for individuals

Previously, if your reliefs exceeded your income, you still had to pay a minimum tax of 1%. Under the NTA 2025, this is abolished. If your income falls below the ₦800,000 threshold, you pay zero.

Small company CIT exemption raised to ₦50 million

For businesses, companies with annual gross turnover of ₦50 million or less are now exempt from Companies Income Tax (CIT) and the Development Levy. This threshold was raised from the previous ₦25 million, giving more small businesses breathing room.

What about VAT?

The VAT rate remains at 7.5%. However, the list of zero-rated items has expanded to include more basic food items, medical supplies, and educational materials. Businesses can now claim input VAT on all business purchases, including assets and services, which was previously restricted.

Capital gains tax changes

Capital Gains Tax for companies is now aligned with the CIT rate at 30%. Gains from digital assets (cryptocurrency) are explicitly taxable. For individuals, capital gains on share sales above ₦150 million trading volume are taxed at your personal income tax rate rather than a flat 10%.

How TaxTask keeps you compliant

TaxTask has been updated to reflect all NTA 2025 changes. Our computation engine uses the correct 2026 tax bands, calculates rent relief automatically from your classified transactions, and applies the ₦800,000 exemption. Whether you file under PAYE or direct assessment, TaxTask handles the math so you can focus on your work.

For specific questions about how the reform affects your situation, we recommend consulting a qualified tax professional or your State Internal Revenue Service.