Your January 2026 payslip arrived with a different tax line, and the gap between old and new is bigger than most employees realize. The Nigeria Tax Act 2025, signed into law on June 26, 2025, scrapped the Personal Income Tax Act and replaced every income tax band in the country.
Six new brackets now stretch from a 0% floor to a 25% ceiling, with the first ₦800,000 of taxable income completely shielded from deductions. That single threshold change affects millions of workers and flips the math on payroll compliance across every state revenue service.
If you earn income in Nigeria through formal employment, contract work, or freelance invoices, this piece strips the PAYE table to raw numbers, walks through five salary examples, and stacks the 2026 structure against the bands it replaced.
Nigeria PAYE table 2026: the complete six-band structure
The new act replaces the old six-band system that ran from 7% to 24% with a wider, more progressive structure. You pay each rate only on the portion of chargeable income that falls within that specific range, PwC Nigeria confirmed.
More on Nigeria taxes:
- Personal income tax in Nigeria: a complete 2026 guide
- Nigeria Tax Act transition rules — what to do for 2025 vs 2026 income
| Taxable income band (annual) | Marginal rate | Max tax in band |
| First ₦800,000 | 0% | ₦0 |
| ₦800,001 to ₦3,000,000 | 15% | ₦330,000 |
| ₦3,000,001 to ₦12,000,000 | 18% | ₦1,620,000 |
| ₦12,000,001 to ₦25,000,000 | 21% | ₦2,730,000 |
| ₦25,000,001 to ₦50,000,000 | 23% | ₦5,750,000 |
| Above ₦50,000,000 | 25% | No cap |
The ₦800,000 zero-rate band functions as an annual threshold, which translates to roughly ₦66,667 per month. Your employer should apply the monthly equivalent when computing PAYE deductions each pay period, dividing the annual threshold by 12 to determine the monthly exempt amount.
The old 1% minimum tax rule has been abolished entirely, and the expanded 0% band replaces that mechanism, PwC Nigeria confirmed.
Old PITA bands versus new income tax rates Nigeria: a direct comparison
Before 2026, the Personal Income Tax Act taxed chargeable income through six bands starting at 7% from the first naira above a Consolidated Relief Allowance that shielded roughly 21% of gross income, the Ogun State Internal Revenue Service documented.
Pre-2026 PITA income tax bands
| Taxable income band (annual) | Marginal rate | Max tax in band |
| First ₦300,000 | 7% | ₦21,000 |
| Next ₦300,000 | 11% | ₦33,000 |
| Next ₦500,000 | 15% | ₦75,000 |
| Next ₦500,000 | 19% | ₦95,000 |
| Next ₦1,600,000 | 21% | ₦336,000 |
| Above ₦3,200,000 | 24% | No cap |
The table below stacks the most critical structural differences so you can see exactly where the old and new systems diverge, KPMG Nigeria’s analysis confirmed.
Side-by-side: old PITA versus new NTA structure
| Feature | Old PITA (pre-2026) | New NTA (2026) | Delta |
| Tax-free threshold | None (CRA applied) | ₦800,000 | + ₦800,000 |
| Top marginal rate | 24% | 25% | +1 percentage point |
| Top rate kicks in at | ₦3,200,000 | ₦50,000,000 | 15.6x higher |
| Number of bands | 6 | 6 (+ 0% band) | +1 band |
| CRA relief | Higher of ₦200,000 or 1% gross, + 20% gross | Abolished | Replaced by rent relief |
| Minimum tax (1%) | Applied | Abolished | Removed entirely |
The widened bands mean the 25% top rate touches only income above ₦50 million annually. Under the old regime, every naira above ₦3.2 million sat in the top bracket at 24%, catching mid-level professionals far earlier.
Worked examples: PAYE at five salary levels under the 2026 bands
Numbers on a rate table only tell half the story until you run actual salaries through them. These five examples show the tax generated in each band and the resulting effective rate, Safeguard Global’s payroll analysis confirmed.
PAYE computation at five income levels
| Annual chargeable income | Tax on 0% band | Tax on 15% band | Tax on 18%+ bands | Total PAYE / Eff. rate |
| ₦600,000 | ₦0 | ₦0 | ₦0 | ₦0 / 0% |
| ₦1,200,000 | ₦0 | ₦60,000 | ₦0 | ₦60,000 / 5% |
| ₦5,000,000 | ₦0 | ₦330,000 | ₦360,000 | ₦690,000 / 13.8% |
| ₦15,000,000 | ₦0 | ₦330,000 | ₦2,250,000 | ₦2,580,000 / 17.2% |
| ₦50,000,000 | ₦0 | ₦330,000 | ₦10,100,000 | ₦10,430,000 / 20.9% |
At ₦600,000, the earner falls entirely within the zero-rate band and owes nothing in PAYE. At ₦1.2 million, only ₦400,000 reaches the 15% bracket, producing an annual tax bill of ₦60,000 and an effective rate of just 5%.
These examples use chargeable income after standard deductions, including 8% pension contributions on basic, housing, and transport allowances. Actual PAYE varies depending on rent relief, NHF deductions, and employer salary structures.
How the ₦800,000 annual exemption translates to monthly PAYE
The ₦800,000 threshold applies to annual chargeable income, but employers must convert it into monthly terms for payroll processing. Dividing that annual exempt amount by 12 produces a monthly tax-free threshold of approximately ₦66,667, which your employer subtracts before applying the progressive rates each pay period.
Each bracket’s annual ceiling is divided by 12 to create monthly equivalents for PAYE computation purposes. The 15% band, for example, covers monthly chargeable income from approximately ₦66,668 up to ₦250,000, BIPO Service confirmed in its payroll guide. Employers remit the withheld amounts to the relevant State Internal Revenue Service by the 10th of the following month.
Minimum-wage earners excluded from personal income tax entirely
Workers earning the national minimum wage of ₦70,000 per month fall below the ₦800,000 chargeable income threshold once standard pension deductions are subtracted. The Nigeria Tax Act explicitly exempts minimum-wage earners from personal income tax under the new framework.
Taiwo Oyedele, now Minister of Finance, said while serving as chairman of the Presidential Committee on Fiscal Policy and Tax Reforms at the 31st Nigerian Economic Summit:
“About 98% of workers will either pay no PAYE tax or pay less,” Oyedele told BusinessDay. Separately, Oyedele emphasized that the reforms are “focused on the people,” designed to “protect vulnerable income earners and very small businesses,” RemoteSolutionsAfrica reported.
Only individuals earning above approximately ₦2 million per month face an upward review in personal income tax under the revised structure, Oyedele told attendees at a First Bank SME Connect webinar, The Guardian reported.
Key deductions that reduce your chargeable income before the bands apply
The tax tables above apply to chargeable income, which is your gross salary minus allowable deductions. What qualifies as a deduction determines where you land in the band structure each month.
Allowable deductions under the Nigeria Tax Act 2025
- Pension contributions: Employee pension at 8% of basic salary plus housing and transport allowances is fully deductible.
- Rent relief: 20% of annual rent paid, capped at ₦500,000 per year, replaces the old CRA, PwC Nigeria confirmed.
- National Housing Fund: 2.5% of basic salary contributions to NHF remain tax-deductible and are now voluntary for private-sector employees.
- Life insurance premiums: Qualifying life insurance policy premiums reduce taxable income under the new framework.
Rent relief requires documentary proof, including lease agreements and payment receipts submitted to your employer. Without that proof, the deduction does not apply, and your chargeable income stays higher in the band structure.
