The complete PAYE guide for Nigerian employers (NTA-2025)
The Nigeria Tax Act 2025 changed how PAYE is computed — new bands, the end of the CRA, rent relief, and three different bases for pension, NHF and NHIS. Here's the whole thing, in plain English, with the numbers.
The Nigeria Tax Act 2025 (NTA-2025) took effect on 1 January 2026 and is the biggest change to PAYE in years. If you run payroll, three things matter most: the new bands, the deductions that come off before tax, and — the part most people get wrong — the different bases each statutory contribution is calculated on.
The new tax bands
PAYE is progressive: each slice of your taxable income is taxed at its own rate. Under NTA-2025 the annual bands are:
- First ₦800,000 — 0%
- Next ₦2,200,000 — 15%
- Next ₦9,000,000 — 18%
- Next ₦13,000,000 — 21%
- Next ₦25,000,000 — 23%
- Above ₦50,000,000 — 25%
Because it's progressive, nobody pays the top rate on their whole salary — only on the slice above each threshold. Your effective rate is almost always far below the band you reach.
The CRA is gone — rent relief is in
The old Consolidated Relief Allowance (CRA) has been abolished. In its place is a rent relief: 20% of the annual rent you pay, capped at ₦500,000, deducted from income before tax. You may need documentation to claim it.
The six eligible deductions
These come off your income before PAYE is calculated: pension, NHF, NHIS, mortgage interest on a self-occupied home, rent relief, and life-insurance premiums for yourself or your spouse.
Three contributions, three different bases
This is the detail that quietly breaks calculators and payslips:
- Pension — 8% (employee) and 10% (employer) of Basic + Housing + Transport (BHT), not gross
- NHF — 2.5% of gross salary (optional for private-sector staff)
- NHIS — 5% (employee) and 10% (employer) of basic salary, for employers with 10+ staff
Get the base wrong and you under- or over-deduct on every payslip, every month — small errors that compound across a whole workforce.
Who's exempt
National minimum-wage earners and military officers are tax-exempt. Employment compensation up to ₦50m isn't chargeable — only the excess is taxed. Independent consultants are subject to 5% Withholding Tax rather than PAYE.
What to do before your next run
- Confirm your tax tables are effective-dated to the new bands
- Check pension is computed on BHT, not gross
- Make sure rent relief and the other deductions are captured
- Run a variance report against last period so nothing changes silently
You can sanity-check any salary with our free PAYE calculator — it applies exactly these rules, on the correct bases.
See it on your own payroll
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