It’s no more news that Nigeria has got a brand new tax law. The old Personal Income Tax Act (PITA) that governed your salary deductions for years has been repealed and replaced by the Nigeria Tax Act (NTA) 2025, which took effect on 1 January 2026.
The question most people are asking is simple: am I paying more or less?
For the majority of Nigerian salary earners, the answer is less. Significantly less in many cases. But that is not the whole story. There are specific groups who are paying more under the new law, and understanding why matters whether you are an employee, an HR manager, or a business owner trying to get payroll right.
This post gives you a direct, side-by-side comparison of the old law and the new one, with real naira figures at different salary levels so you can see exactly where you land.
The Two Laws Head to Head
Here is every major change in one table.
| Old PITA (pre-2026) | NTA 2025 (from Jan 2026) | |
|---|---|---|
| Tax-free threshold | N300,000 per year | N800,000 per year |
| Starting rate | 7% from N1 | 0% up to N800,000 |
| Main relief system | CRA: N200k + 20% of gross | Rent Relief: 20% of rent, max N500k |
| Top marginal rate | 24% | 25% |
| Number of tax bands | 6 | 6 |
| Minimum individual tax | 1% of gross income | Abolished |
| Pension deduction | 8% of gross (employee) | 8% of gross (employee) |
| NHF deduction | 2.5% of basic | 2.5% of basic |
| Life insurance deduction | Allowed | Allowed |
| Gratuity taxation | Exempt | Taxable |
| Leave allowance | Up to 10% of basic exempt | Up to 10% of basic exempt |
The two most impactful changes in that table are the ones that affect the most people directly. First, the tax-free threshold tripling from N300,000 to N800,000. Second, the complete removal of the Consolidated Relief Allowance (CRA) and its replacement with the new Rent Relief system. We will dig into both of those properly in the sections below.
The Biggest Change: The Tax-Free Threshold
This single change is responsible for most of the savings that low and middle earners are seeing.
Under the old PITA, your employer could deduct income tax from the very first naira you earned above N300,000 per year. The starting rate was 7%. So someone earning N600,000 annually (N50,000/month) was paying tax. Not a lot, but something.
Under the NTA 2025, the first N800,000 of your chargeable income is taxed at 0%. Zero. Nothing.
To put that in context: the current national minimum wage is N70,000 per month, which is N840,000 per year. After an 8% pension deduction, the chargeable income for a minimum wage earner comes to roughly N773,000. That sits entirely within the zero-rate band. A minimum wage earner in Nigeria now pays no income tax at all under the NTA 2025.
The tax-free threshold under NTA 2025 (N800,000) is more than double what it was under the old PITA (N300,000 after CRA). For low earners, this is the single biggest financial change in the new law.
The Most Misunderstood Change: CRA vs Rent Relief
This is where most of the confusion lives, and where high earners feel the pinch.
What was the CRA?
The Consolidated Relief Allowance was a deduction you subtracted from your gross income before applying the old tax bands. It was calculated as the higher of N200,000 or 1% of your gross income, plus 20% of your gross income on top of that.
For a practical example: someone earning N6,000,000 annually got a CRA of N200,000 plus N1,200,000 (20% of N6m), totalling N1,400,000. That N1,400,000 was subtracted from their gross income before any tax was applied.
The higher your salary, the bigger your CRA. And because the 20% component scaled with income, the relief was very generous for higher earners.
What replaced it?
The CRA is gone. Under the NTA 2025, it has been replaced by Rent Relief: you can deduct 20% of the actual annual rent you pay for residential accommodation, capped at N500,000.
This sounds reasonable, but there are two important differences from the old CRA. One: you only get it if you actually pay rent and can prove it with documentation (tenancy agreement, receipts, or a landlord letter). Two: it is capped at N500,000 regardless of how high your salary is. Someone earning N24,000,000 a year cannot deduct more than N500,000 in rent relief, where before they could claim a CRA of N5,000,000 or more.
Who loses out from this change?
High earners who were relying on the CRA as a major deduction are worse off under the rent relief system. The zero-rate band rising to N800,000 helps everyone, but for someone on N24,000,000 per year, that band offset is smaller than the loss of a multi-million naira CRA deduction.
Lower earners are generally better off even without claiming rent relief, because the N800,000 zero-rate band gives them more relief than the old CRA ever did at their income level.
Here is a comparison showing how the old CRA and the new Rent Relief differ across salary levels, assuming different levels of rent paid annually:
| Annual Gross | Old CRA | New Rent Relief (no rent) | New Rent Relief (N840k rent/yr) | New Rent Relief (N1.8m rent/yr) |
|---|---|---|---|---|
| N1,200,000 | N440,000 | N0 | N168,000 | N360,000 |
| N2,400,000 | N680,000 | N0 | N168,000 | N360,000 |
| N6,000,000 | N1,400,000 | N0 | N168,000 | N360,000 |
| N12,000,000 | N2,600,000 | N0 | N168,000 | N360,000 |
| N24,000,000 | N5,000,000 | N0 | N168,000 | N500,000 |
* Old CRA calculated as N200,000 + 20% of gross income. Rent relief figures shown for three rent scenarios: no rent paid (N0), N840,000/year rent (N70k/month), and N1,800,000/year rent (N150k/month). Rent relief is capped at N500,000.
The table makes the issue very clear. For someone earning N12 million a year, the old CRA gave them N2,600,000 in deductions. Under the new law, even if they pay N150,000 per month in rent, they only get N360,000 in deductions. That is a significant reduction in relief, which is why their overall tax bill goes up even though the bands have shifted.
Read Also: Nigerian PAYE Tax Calculator 2026: How Much Tax Will You Actually Pay?
Are You Paying More or Less? The Full Picture by Salary
Here is the honest answer for different income levels. Figures assume 8% pension deduction only. Rent relief not included to keep the comparison clean.
| Monthly Gross | Old PITA Annual Tax | NTA 2025 Annual Tax | Annual Difference | Verdict |
|---|---|---|---|---|
| N60,000 | ~N45,000 | N0 | -N45,000 saved | Pays less |
| N100,000 | ~N86,400 | ~N45,600 | -N40,800 saved | Pays less |
| N150,000 | ~N163,200 | ~N128,400 | -N34,800 saved | Pays less |
| N300,000 | ~N456,000 | ~N378,960 | -N77,040 saved | Pays less |
| N500,000 | ~N939,600 | ~N726,600 | -N213,000 saved | Pays less |
| N1,000,000 | ~N2,268,000 | ~N2,107,200 | -N160,800 saved | Pays less |
| N2,000,000 | ~N5,016,000 | ~N4,843,800 | -N172,200 saved | Pays less |
| N5,000,000 | ~N13,896,000 | ~N14,305,800 | +N409,800 more | Pays more |
* Old PITA figures based on standard CRA formula and old progressive bands. NTA 2025 figures based on new bands with 8% pension deduction only, no rent relief applied. Adding rent relief under NTA 2025 would reduce the new tax figures further.
The turning point is somewhere around N3 million to N4 million per month. Below that, almost everyone is paying less under the NTA 2025. Above that, particularly without the old CRA to offset income, some earners may pay more.
What Changed for Specific Groups
NYSC corps members and entry-level earners
The biggest beneficiaries. A corps member earning the standard N77,000 monthly allowance earns N924,000 per year. After 8% pension (N73,920), their chargeable income is about N850,080. Only N50,080 of that is taxable at 15%, meaning their annual tax is roughly N7,512. Under the old law, that same person would have paid more. For many corps members on allowances below N66,667 per month, the tax bill is now zero.
Junior and mid-level employees (N100,000 to N500,000/month)
This group sees the most meaningful savings in absolute naira terms. The combination of the higher zero-rate band and the abolition of the minimum tax rule means workers who were previously having small but irritating amounts deducted from modest salaries are now keeping more. The savings range from N3,000 to N18,000 per month depending on salary level.
Senior professionals and executives (N1,000,000 to N3,000,000/month)
Still paying less in most cases, but the margin is narrower. The new tax bands at the upper end (21%, 23%, 25%) climb higher than the old 24% top rate, and the loss of a large CRA starts to bite. If this group pays significant rent and documents it properly, the rent relief partially compensates. But many in this bracket own their homes or have employer-provided housing, meaning they get no rent relief at all.
Very high earners (above N4,000,000/month)
Likely paying more. The CRA at this income level was enormous, often N3,000,000 to N5,000,000 or more per year in deductions. The replacement cap of N500,000 in rent relief does not come close to matching that. Combined with the new 25% top rate (the old top rate was 24%), high earners are carrying a heavier load under the NTA 2025 than under PITA.
Employees with employer-provided accommodation
Worth flagging specifically. If your employer provides housing as a benefit, you typically do not pay rent. Under the old law, you still got the CRA regardless. Under the new law, you cannot claim rent relief on accommodation you do not personally pay for. This group loses the housing-linked relief entirely unless they rent a separate private property.
Read Also: How to Calculate Your Take-Home Pay in Nigeria (2026 Edition)
Two Other Changes Worth Knowing
Gratuity is now taxable
Under the old PITA, gratuities (lump sum payments made on retirement or completion of service) were generally exempt from income tax. The NTA 2025 changed this. Gratuity is now taxable as income. If you are approaching retirement or negotiating a severance package, this is a change your HR team and tax adviser need to factor in. The good news is that compensation for job loss is now tax-exempt up to N50,000,000, up from N10,000,000 previously.
The minimum individual tax is gone
Under the old PITA, even if your chargeable income was very low, you still owed a minimum of 1% of your gross income in tax. This caught some workers whose deductions pushed their chargeable income to near zero but still resulted in a small tax bill. The NTA 2025 abolished this entirely. If the bands produce zero tax, you pay zero. No floor.
Find out your exact old vs new tax difference.
The NairaSeed Tax Calculator shows you your 2026 PAYE under NTA 2025 and your equivalent figure under the old PITA, side by side, with your full band-by-band breakdown and effective rate. Enter your salary once and see both numbers instantly.
>> Compare your old and new tax bill here
Related reading on NairaSeed:
- Nigeria’s New Rent Relief Deduction: How to Claim Up to N500,000 Off Your Income Tax in 2026
- PAYE Tax in Nigeria: A Complete Guide for Employees and Employers (2026)
Disclaimer
All tax figures in this article are estimates based on the Nigeria Tax Act 2025 as gazetted in June 2025 and the old Personal Income Tax Act bands as they applied before 1 January 2026. Old PITA estimates use the standard CRA formula (N200,000 + 20% of gross income). Individual results will vary depending on employer structure, exact pensionable emoluments, approved deductions, and state of residence. This article is for educational purposes only and is not financial or tax advice. Consult a qualified tax professional for personalised guidance.
