Nigeria's 2025 reform package comprises four Acts: the Nigeria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act. The NTA is the consolidated statute — it replaced PITA, CITA, the VAT Act, CGTA, PPPT and the Stamp Duties Act effective 1 January 2026.
Two practical implications matter most: (a) the 2025 tax year (filed by 31 March 2026) still uses the old PITA bands, but everything from 2026 onwards uses the new ones, and (b) the federal collector is now the NRS (Nigeria Revenue Service), not FIRS.
1 · PAYE bands
From 1 January 2026 the NTA 2025 introduces a generous ₦800,000 tax-free threshold and a six-band progressive schedule running from 0% to 25%. The top rate only kicks in on chargeable income above ₦50,000,000.
| Band | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (up to ₦3,000,000) | 15% |
| Next ₦9,000,000 (up to ₦12,000,000) | 18% |
| Next ₦12,000,000 (up to ₦24,000,000) | 21% |
| Next ₦26,000,000 (up to ₦50,000,000) | 23% |
| Above ₦50,000,000 | 25% |
These are marginal rates — each rate applies only to the slice of income within that band. For an earner with ₦13,200,000 of chargeable income that means ₦0 + ₦330,000 + ₦1,620,000 + ₦252,000 = ₦2,202,000 in tax (effective rate ~16.7%).
The 2025 tax year (filed by 31 March 2026) still uses the pre-reform PITA bands:
| Band | Rate |
|---|---|
| First ₦300,000 | 7% |
| Next ₦300,000 | 11% |
| Next ₦500,000 | 15% |
| Next ₦500,000 | 19% |
| Next ₦1,600,000 | 21% |
| Above ₦3,200,000 | 24% |
2 · CRA → Rent Relief
Under PITA the Consolidated Relief Allowance was the higher of ₦200,000 or (₦200,000 + 20% of gross income). For most earners it worked out to ₦200,000 + 20% × gross — e.g. ₦2,600,000 of relief on ₦12M of gross income.
From 2026 CRA is abolished and replaced with a much narrower Rent Relief:
Pension, NHF and NHIS deductions remain available but must be claimed in writing with documentation. The headline effect: the CRA was more generous for most earners; this change often increases tax liability for non-renters and those with low rent.
3 · VAT
VAT remains at 7.5% — the rate hasn't moved since the 2020 Finance Act. The scope has, though, expanded under NTA 2025:
- Digital services are now within scope.
- E-invoicing (fiscalization) is mandatory; businesses must adopt NRS-mandated systems on a phased rollout from early 2026.
- Businesses with annual turnover ≤ ₦100 million are exempt from VAT registration and collection. They can voluntarily opt in to recover input VAT.
- All medicinal products, healthcare services, and basic food items are zero-rated — these expanded categories make up ~82% of household consumption and nearly 100% for low-income households.
- Filing is monthly; returns are due by the 21st of the following month.
4 · NHF
2.5% of basic salary, contributed by the employee. Managed by the Federal Mortgage Bank of Nigeria (FMBN). Statutory for formal-sector employees earning ₦3,000+ per month.
NHF contributions are recognised as allowable deductions under NTA 2025 — they reduce chargeable income — and qualify the employee for Federal Mortgage Loans.
5 · Pension
Under the Pension Reform Act 2014:
- Employee contribution: 8% of pensionable emoluments. Tax-deductible.
- Employer contribution: 10% of pensionable emoluments. Paid by the employer in addition to gross — not deducted from the employee's pay.
Contributions are remitted to the employee's chosen Pension Fund Administrator (PFA).
6 · Companies Income Tax
Under NTA 2025, CIT classification is binary based on size:
| Band | Rate |
|---|---|
| Small (turnover ≤ ₦50M and fixed assets ≤ ₦250M) | 0% |
| Large (turnover > ₦50M) | 30% |
Professional service firms (lawyers, engineers, accountants) do not qualify for the 0% small-company rate regardless of size.
The annual CIT self-assessment return is due 6 months after financial year-end with audited accounts. An estimated tax return is due 3 months after financial year-start.
7 · Withholding Tax
WHT is an advance payment of income tax — deducted at source by the payer and credited against the recipient's final tax liability. It is not an extra tax.
| Payment type | Resident | Non-resident |
|---|---|---|
| Contracts, consultancy, commissions | 5% | 10% |
| Services (general) | 5% | 10% |
| Goods supply | 2% | 5% |
| Rent | 10% | 10% |
| Dividends | 10% | 10% |
| Interest | 10% | 10% |
| Royalties | 10% | 10% |
Three big NTA 2025 changes worth knowing:
- Small companies (resident; turnover ≤ ₦50M) are exempt from WHT on monthly transactions below ₦2M, provided they hold a valid TIN.
- WHT remittance is due by the 21st of the following month with an electronic supplier schedule (TIN, address, transaction type, WHT deducted, invoice number).
- Penalty for failure to deduct or remit: 40% of the amount not deducted — almost half the tax itself again in fines.
8 · NRS terminology
9 · Filing deadlines
Every Nigerian taxpayer should commit four dates to memory: PAYE on the 10th, VAT and WHT on the 21st, annual PIT on March 31, and CIT 6 months after financial year-end. Late filing penalties:
- Late annual income tax filing: ₦100,000 in the first month, then ₦50,000 per month. False declarations can incur fines up to ₦1,000,000 or imprisonment.
- Late PAYE deduction or remittance: 40% of the amount.
- Failure to file WHT schedule: 10% of the amount not remitted, plus accrued interest.
10 · Calculator assumptions
For transparency, here's how every Taxer calculator on this site treats the inputs you provide:
- Taxable income includes salary, bonuses, allowances, BIK, gratuity (now taxable under NTA 2025), digital/virtual asset gains, prizes, honoraria and grants.
- Residents are taxed on worldwide income; non-residents on Nigeria-sourced income only. Residency = domicile in Nigeria, OR physical presence ≥183 days in a tax year, OR strong economic/family ties.
- Deductions are applied in this order: employee pension (8% of pensionable), NHF (2.5% of basic), NHIS (where contributed), rent relief (2026) or CRA (2025), life assurance premiums (cap ₦100k), approved mortgage interest.
- Pensionable emoluments = Basic + Housing + Transport only.
- Employer pension (10% of pensionable) is reported separately as employer cost — never deducted from the employee's pay.
- Minimum tax (1% of gross) is applied for 2025-and-earlier regimes and removed for 2026 onwards.
- WHT deducted from your invoices is treated as an advance credit, not a separate tax.
- Small-company CIT exemption (0%) auto-applies when turnover ≤ ₦50M and fixed assets ≤ ₦250M, excluding professional service firms.
- VAT registration exemption applies when annual turnover ≤ ₦100M.