Nigeria Personal Income Tax Guide 2026

Overview — Personal Income Tax in Nigeria

The Federal Inland Revenue Service (FIRS) sets the policy framework for personal income tax, but collection is handled by each state's Internal Revenue Service (IRS). The Personal Income Tax Act (PITA) Cap P8 LFN 2004 (as amended) governs the tax. Nigeria uses a progressive rate structure with six brackets. The tax year is the calendar year (1 January to 31 December). Employers deduct PAYE monthly and remit to the state IRS. Self-employed individuals file annual returns by 31 March of the following year.

Progressive Tax Rates — National Formula

The national tax rate formula for individuals (under the Third Schedule of PITA) is as follows, applied to taxable income after deductions:

• First NGN 300,000: 7%
• Next NGN 300,000 (300,001–600,000): 11%
• Next NGN 500,000 (600,001–1,100,000): 15%
• Next NGN 500,000 (1,100,001–1,600,000): 19%
• Next NGN 1,600,000 (1,600,001–3,200,000): 21%
• Above NGN 3,200,000: 24%

The top marginal rate of 24% applies to income exceeding NGN 3.2 million, making Nigeria's top rate relatively moderate by global standards.

Consolidated Relief Allowance (CRA)

The Consolidated Relief Allowance (CRA) is the primary deduction available to all individual taxpayers. It is calculated as the higher of: NGN 200,000 or 1% of gross income, plus 20% of gross income. The CRA is deducted from gross income to arrive at taxable income. Example: For gross income of NGN 5,000,000, CRA = NGN 200,000 (since 1% is NGN 50,000, the minimum applies) + 20% × 5,000,000 = NGN 200,000 + NGN 1,000,000 = NGN 1,200,000. Taxable income = NGN 3,800,000.

PAYE for Salaried Employees

Pay As You Earn (PAYE) is the mechanism for taxing employment income. Employers deduct tax monthly from salaries and remit to the state IRS on or before the 10th of the following month. The employer provides the employee with a Tax Deduction Card (Form A) showing monthly deductions. At the end of the year, the employer issues a Certificate of Tax Deducted (Form A2 or equivalent) which the employee uses for their annual tax return. Non-compliance by employers carries penalties and interest.

Self-Assessment for Self-Employed

Self-employed individuals, professionals, and business owners must file a self-assessment return annually. The return is due by 31 March of the following year. Tax is payable in two instalments: a first instalment paid by 31 March (based on estimated income), and a final instalment due by 31 December. Late filing penalties include NGN 5,000 initial penalty plus NGN 100 per day of continued default. Interest at the CBN minimum rediscount rate plus 5% applies on unpaid tax.

Minimum Tax

If a taxpayer's computed tax is less than the minimum tax, the minimum tax applies. For individuals, the minimum tax is 1% of gross turnover for companies, and for individuals it is the higher of 1% of gross income or NGN 15,000 per annum. This ensures that all taxpayers contribute a minimum amount regardless of deductions or allowances.

FAQs

Do I need to file a tax return if I only earn salary?

Yes. All individuals with income exceeding the tax-free threshold must file an annual return. Your employer handles PAYE deductions, but you are still required to file a self-assessment return annually.

What is the tax-free threshold in Nigeria?

The effective tax-free threshold varies by state and depends on the Consolidated Relief Allowance. For a single individual, the first roughly NGN 350,000–NGN 400,000 of annual income may be effectively tax-free depending on the state.

Can married couples file jointly in Nigeria?

Nigeria does not have joint filing. Each individual files separately. However, spouses may split certain income streams for tax planning purposes.

Disclaimer

This guide provides general information about personal income tax in Nigeria for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Nigerian tax advisor or your state IRS directly for advice specific to your situation. InvestmentKit does not provide tax advice.