Nigeria Income Tax Calculator

What this calculator does

Estimates your Nigerian personal income tax under the new Nigeria Tax Act (effective 1 January 2026), applying the raised ₦800,000 tax-free threshold and the new rent relief to your taxable income.

Who this is for

Nigerian employees estimating their PAYE under the new tax law, anyone comparing a job offer, or people wanting to understand how the 2026 reforms changed their tax bill versus the old system.

How this calculator works

Uses the Nigeria Tax Act 2025 personal income tax bands, effective 1 January 2026: 0% up to ₦800,000, then five progressive bands rising to 25% above ₦50 million. The old Consolidated Relief Allowance was scrapped and replaced with a rent relief of 20% of annual rent paid, capped at ₦500,000, which is deducted from gross income before the bands are applied.

Worked example

₦3,600,000 gross income, ₦1,000,000 annual rent paid: rent relief = 20% × 1,000,000 = ₦200,000 (below the ₦500,000 cap, so the full amount applies). Taxable income = 3,600,000 − 200,000 = ₦3,400,000, which falls in the ₦3,000,000–₦12,000,000 band. Tax = ₦330,000 base + 18% × (3,400,000 − 3,000,000) = 330,000 + 72,000 = ₦402,000 total tax, an effective rate of about 11.2% on gross income.

A second example at ₦15,000,000 gross with ₦2,000,000 rent paid: rent relief hits the ₦500,000 cap territory but 20% × 2,000,000 = ₦400,000, still under the cap, so the full ₦400,000 applies. Taxable income = ₦14,600,000, falling in the ₦12,000,000–₦25,000,000 band. Tax = ₦1,950,000 base + 21% × (14,600,000 − 12,000,000) = 1,950,000 + 546,000 = ₦2,496,000, an effective rate of about 16.6% on gross income.

How Much Does Pension Contribution Actually Save?

Nigeria's mandatory pension contribution (8% of gross under the Contributory Pension Scheme) is fully deductible before tax bands apply, alongside the National Housing Fund (2.5%) and life assurance premiums (up to ₦100,000). A concrete example: on ₦5,000,000 gross income with no other reliefs, tax comes to ₦690,000. Deduct the mandatory 8% pension contribution (₦400,000) first, and taxable income drops to ₦4,600,000, cutting tax to ₦618,000 — a saving of ₦72,000, roughly 18% of the contribution, matching the marginal bracket this income sits in.

Since pension contributions are mandatory rather than optional for most employees, this isn't really a planning lever the way South Africa's voluntary retirement annuities are — but it's worth understanding that the deduction is happening automatically, and that entering raw gross salary into this calculator without subtracting the mandatory 8% will overstate your real tax bill.

Where your income goes

2026 tax bracket breakdown

Common mistakes

• Using the old ₦300,000 threshold or CRA. Both were replaced effective 1 January 2026 — the tax-free threshold nearly tripled to ₦800,000, and the CRA is gone entirely, replaced by rent relief.
• Forgetting rent relief is capped. Rent relief is 20% of what you actually pay, but never more than ₦500,000 a year regardless of how much rent you pay.
• Applying the top rate to your whole income. Even at ₦100 million income, only the portion above ₦50 million is taxed at 25% — the rest is taxed progressively through the lower bands.
• Forgetting rent relief requires you to actually pay rent. Homeowners without a rental payment don't qualify for this specific relief, unlike the old CRA which applied more broadly regardless of housing situation.
• Entering raw gross salary without subtracting mandatory pension. The 8% Contributory Pension Scheme deduction happens automatically and is fully tax-deductible — leaving it out of your taxable income figure will overstate your calculated tax.
• Forgetting the National Housing Fund and life assurance deductions. NHF (2.5% of gross) and life assurance premiums (up to ₦100,000) further reduce taxable income beyond just pension and rent relief, if applicable to your situation.

Related calculators

Frequently Asked Questions