NTA 2025: How to calculate personal income tax

[sokani]

It is now widely known that the new tax law has been approved, and beginning in January 2026, every Nigerian will be obligated to pay tax. The new tax law covers the company income tax, personal income tax, value added tax, etc. However, in this post, I'll be focusing on Personal Income Tax (PIT) and how to calculate it.


What is Personal Income Tax (PIT)?
It is the portion of your earnings you are obligated to remit to the government as tax.

What are the taxable incomes?
The taxable incomes cover most forms of your earnings and they include wages, bonuses, financial gifts, royalties, winnings, etc.

Tax band
The Nigerian Tax Act (NTA) 2025 introduces a set of income brackets that determine the rate at which personal income tax is applied and they are:

+	-------------	+	---------------------------------	+	-----------------	+
|	Band	|	Income Range (N)	|	Tax Rate	|
+	-------------	+	---------------------------------	+	-----------------	+
|	1	|	2,200,000	|	15%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	2	|	9,000,000	|	18%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	3	|	13,000,000	|	21%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	4	|	25,000,000	|	23%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	5	|	50,000,000	|	25%	|
+	-------------	+	---------------------------------	+	-----------------	+

How to calculate taxable incomes?
Under the Nigerian Tax Act (2025), the first ₦800,000 one earns is tax-free. It means if your annual income is ₦800,000 or below, you're not obligated to pay tax.

Lets take a look at some examples:
Musa earned ₦1,500,000 for the year. To calculate Musa's taxable income, deduct ₦800,000 from ₦1,500,000.
That is: ₦1,500,000 - ₦800,000 = ₦700,000 (Remember, the first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rate. Musa didn't make up to the amount (₦2,200,000) in the first tax band, but you will still apply the rate 15% to it. That is:
Musa's taxable income = ₦700,000 x 15% = ₦105,000
Musa is to pay ₦105,000 as PIT to the government.

Jane earned ₦5,000,000 for the year. To calculate her taxable income, deduct ₦800,000 from ₦5,000,000
That is: ₦5,000,000 - ₦800,000 = ₦4,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Jane earned up to the amount (₦2,200,000), in the first tax band. Remove it and apply 15%. Whatever amount is remaining in Jane's account, apply the second tax band rate 18% to it. That is:
₦2,200,000 x 15% = ₦330,000
₦2,000,000 x 18% = ₦360,000
Jane's taxable income = ₦330,000 + ₦360,000 = ₦690,000
Jane is to pay ₦690,000 as PIT to the government.

Olumide earned ₦10,000,000 for the year. To calculate his taxable income, deduct ₦800,000 from ₦10,000,000
That is: ₦10,000,000 - ₦800,000 = ₦9,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Olumide earned up to the amount (₦2,200,000), in the first tax band, remove it and apply 15 %. Whatever amount is remaining in Olumide's account, apply the second tax band rate 18% to it. That is:
₦2,200,000 x 15% = ₦330,000
₦7,000,000 x 18% = ₦1,260,000
Olumide's taxable income = ₦330,000 + ₦1,260,000 = ₦1,590,000
Olumide is to pay ₦1,590,000 as PIT to the government.

Emeka earned ₦50,000,000 for the year. To calculate his taxable income, deduct ₦800,000 from ₦50,000,000
That is: ₦50,000,000 - ₦800,000 = ₦49,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Emeka earned up to the amount (₦2,200,000) in the first band. Remove it and apply 15%. He earned up to the amount (₦9,000,000) in the second tax band. Remove it and apply 18%.  He earned up to the amount (₦13,000,000), in the third tax band. Remove it and apply 21%. He earned up to the amount (₦25,000,000), in the fourth tax band. Remove it and apply at 23%. What is left in Emeka's account is ₦800,000. Remove it and apply 25% rate. That is:
₦2,200,000 x 15% = ₦330,000
₦9,000,000 x 18% = ₦1,620,000
₦13,000,000 x 21% = ₦2,730,000
₦25,000,000 x 23% = ₦5,750,000
₦800,000 x 25% = ₦200,000
Emeka's taxable income will be: ₦330,000 + ₦1,620,000 + ₦2,730,000 + ₦5,750,000 + ₦200,000 = ₦10,630,000
Emeka is to pay ₦10,630,000 as PIT to the government.

Deborah earned ₦200,000,000 for the year. To calculate her taxable income, deduct ₦800,000 from ₦200,000,000
That is: ₦200,000,000 - ₦800,000 = ₦199,200,000 (The first ₦800,000 income is tax-free).
The next step is to compute the tax due using the applicable rates.
It is the same as previous examples.  Remove the amount from the tax bands and apply the rates sequentially until you get to last tax band. Whatever amount is remaining in Deborah's account, apply the rate. That is:
₦2,200,000 x 15% = ₦330,000
₦9,000,000 x 18% = ₦1,620,000
₦13,000,000 x 21% = ₦2,730,000
₦25,000,000 x 23% = ₦5,750,000
₦150,800,000 x 25 = ₦37,700,000
Deborah's taxable will be: ₦330,000 + ₦1,620,000 + ₦2,730,000 + ₦5,750,000 + ₦37,700,000 = ₦48,130,000
Deborah is to pay ₦48,130,000 as PIT to the government.

Please note that under the NTA 2025, tenants are qualified for a rent relief, which is 20% of their rent and it is capped at ₦500,000.

Now, let's take a look at some examples with rent relief:
Example A:
If the rent is ₦500,000 and annual income is N2,000,000, the rent relief will be:
20% x ₦500,000 = ₦100,000.
To calculate the taxable income:
Subtract ₦800,000 (tax-free) and ₦100,000 (rent relief) from the ₦2,000,000 (annual income). Then, use the previous calculations above to calculate the personal income tax.

Example B:
If the rent is ₦1,000,000 and annual income is N4,000,000. The rent relief will be:
20% x ₦1,000,000 = ₦200,000.
To calculate the taxable income:
Subtract ₦800,000 (tax-free) and ₦200,000 (rent relief) from ₦4,000,000 (annual income). Then, use the previous calculation above to calculate the personal income tax.

Example C:
If the rent is ₦5,000,000 and annual income is N10,000,000.
The rent relief will be:
20% x ₦5,000,000 = ₦1,000,000
But under NTA 2025, rent relief is capped at N500,000. So the person can only receive N500,000.
To calculate the taxable income,
Subtract ₦800,000 (tax-free) and ₦500,000 (rent relief) from the ₦10,000,000 (annual income). Then, use the previous calculate above to calculate the personal income tax.

References:
1. https://share.google/Lk9qZ4b5ViToPr1Rs - [PDF]
2. https://www.pwc.com/ng/en/publications/the-nigerian-tax-reform-acts.html

[hakuna133]

Thank you for this nice explanation on PIT. This is helpful and much appreciated and I want to ask how the tax will be gotten for those without a regular job like petty traders selling crayfish or megger job workers like laborers in a construction site?

Secondly, from the reference you gave (https://eu.docworkspace.com/d/sIKO53pDAArvDjMUG?sa=601.1074 - [PDF]
), it is obvious our government has gone to copy the tax system of some European countries where things are working forgetting that a lot of Nigerians are living below poverty line.

[sokani]

Secondly, from the reference you gave (https://eu.docworkspace.com/d/sIKO53pDAArvDjMUG?sa=601.1074 - [PDF]
), it is obvious our government has gone to copy the tax system of some European countries where things are working forgetting that a lot of Nigerians are living below poverty line.

Thank you for bringing this to my attention, I entered a wrong link.

[ArabBTC]

It is now widely known that the new tax law has been approved, and beginning in January 2026, every Nigerian will be obligated to pay tax. The new tax law covers the company income tax, personal income tax, value added tax, etc. However, in this post, I'll be focusing on Personal Income Tax (PIT) and how to calculate it.


What is Personal Income Tax (PIT)?
It is the portion of your earnings you are obligated to remit to the government as tax.

What are the taxable incomes?
The taxable incomes cover most forms of your earnings and they include wages, bonuses, financial gifts, royalties, winnings, etc.

Tax band
The Nigerian Tax Act (NTA) 2025 introduces a set of income brackets that determine the rate at which personal income tax is applied and they are:

+	-------------	+	---------------------------------	+	-----------------	+
|	Band	|	Income Range (N)	|	Tax Rate	|
+	-------------	+	---------------------------------	+	-----------------	+
|	1	|	2,200,000	|	15%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	2	|	9,000,000	|	18%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	3	|	13,000,000	|	21%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	4	|	25,000,000	|	23%	|
+	-------------	+	---------------------------------	+	-----------------	+
|	5	|	50,000,000	|	25%	|
+	-------------	+	---------------------------------	+	-----------------	+

How to calculate taxable incomes?
Under the Nigerian Tax Act (2025), the first ₦800,000 one earns is tax-free. It means if your annual income is ₦800,000 or below, you're not obligated to pay tax.

Lets take a look at some examples:
Musa earned ₦1,500,000 for the year. To calculate Musa's taxable income, deduct ₦800,000 from ₦1,500,000.
That is: ₦1,500,000 - ₦800,000 = ₦700,000 (Remember, the first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rate. Musa didn't make up to the amount (₦2,200,000) in the first tax band, but you will still apply the rate 15% to it. That is:
Musa's taxable income = ₦700,000 x 15% = ₦105,000
Musa is to pay ₦105,000 as PIT to the government.

Jane earned ₦5,000,000 for the year. To calculate her taxable income, deduct ₦800,000 from ₦5,000,000
That is: ₦5,000,000 - ₦800,000 = ₦4,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Jane earned up to the amount (₦2,200,000), in the first tax band. Remove it and apply 15%. Whatever amount is remaining in Jane's account, apply the second tax band rate 18% to it. That is:
₦2,200,000 x 15% = ₦330,000
₦2,000,000 x 18% = ₦360,000
Jane's taxable income = ₦330,000 + ₦360,000 = ₦690,000
Jane is to pay ₦690,000 as PIT to the government.

Olumide earned ₦10,000,000 for the year. To calculate his taxable income, deduct ₦800,000 from ₦10,000,000
That is: ₦10,000,000 - ₦800,000 = ₦9,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Olumide earned up to the amount (₦2,200,000), in the first tax band, remove it and apply 15 %. Whatever amount is remaining in Olumide's account, apply the second tax band rate 18% to it. That is:
₦2,200,000 x 15% = ₦330,000
₦7,000,000 x 18% = ₦1,260,000
Olumide's taxable income = ₦330,000 + ₦1,260,000 = ₦1,590,000
Olumide is to pay ₦1,590,000 as PIT to the government.

Emeka earned ₦50,000,000 for the year. To calculate his taxable income, deduct ₦800,000 from ₦50,000,000
That is: ₦50,000,000 - ₦800,000 = ₦49,200,000 (The first ₦800,000 income is tax-free)
The next step is to compute the tax due using the applicable rates.
Emeka earned up to the amount (₦2,200,000) in the first band. Remove it and apply 15%. He earned up to the amount (₦9,000,000) in the second tax band. Remove it and apply 18%.  He earned up to the amount (₦13,000,000), in the third tax band. Remove it and apply 21%. He earned up to the amount (₦25,000,000), in the fourth tax band. Remove it and apply at 23%. What is left in Emeka's account is ₦800,000. Remove it and apply 25% rate. That is:
₦2,200,000 x 15% = ₦330,000
₦9,000,000 x 18% = ₦1,620,000
₦13,000,000 x 21% = ₦2,730,000
₦25,000,000 x 23% = ₦5,750,000
₦800,000 x 25% = ₦200,000
Emeka's taxable income will be: ₦330,000 + ₦1,620,000 + ₦2,730,000 + ₦5,750,000 + ₦200,000 = ₦10,630,000
Emeka is to pay ₦10,630,000 as PIT to the government.

Deborah earned ₦200,000,000 for the year. To calculate her taxable income, deduct ₦800,000 from ₦200,000,000
That is: ₦200,000,000 - ₦800,000 = ₦199,200,000 (The first ₦800,000 income is tax-free).
The next step is to compute the tax due using the applicable rates.
It is the same as previous examples.  Remove the amount from the tax bands and apply the rates sequentially until you get to last tax band. Whatever amount is remaining in Deborah's account, apply the rate. That is:
₦2,200,000 x 15% = ₦330,000
₦9,000,000 x 18% = ₦1,620,000
₦13,000,000 x 21% = ₦2,730,000
₦25,000,000 x 23% = ₦5,750,000
₦150,800,000 x 25 = ₦37,700,000
Deborah's taxable will be: ₦330,000 + ₦1,620,000 + ₦2,730,000 + ₦5,750,000 + ₦37,700,000 = ₦48,130,000
Deborah is to pay ₦48,130,000 as PIT to the government.

Please note that under the NTA 2025, tenants are qualified for a rent relief, which is 20% of their rent and it is capped at ₦500,000.

Now, let's take a look at some examples with rent relief:
Example A:
If the rent is ₦500,000 and annual income is N2,000,000, the rent relief will be:
20% x ₦500,000 = ₦100,000.
To calculate the taxable income:
Subtract ₦800,000 (tax-free) and ₦100,000 (rent relief) from the ₦2,000,000 (annual income). Then, use the previous calculations above to calculate the personal income tax.

Example B:
If the rent is ₦1,000,000 and annual income is N4,000,000. The rent relief will be:
20% x ₦1,000,000 = ₦200,000.
To calculate the taxable income:
Subtract ₦800,000 (tax-free) and ₦200,000 (rent relief) from ₦4,000,000 (annual income). Then, use the previous calculation above to calculate the personal income tax.

Example C:
If the rent is ₦5,000,000 and annual income is N10,000,000.
The rent relief will be:
20% x ₦5,000,000 = ₦1,000,000
But under NTA 2025, rent relief is capped at N500,000. So the person can only receive N500,000.
To calculate the taxable income,
Subtract ₦800,000 (tax-free) and ₦500,000 (rent relief) from the ₦10,000,000 (annual income). Then, use the previous calculate above to calculate the personal income tax.

References:
1. https://share.google/Lk9qZ4b5ViToPr1Rs - [PDF]
2. https://www.pwc.com/ng/en/publications/the-nigerian-tax-reform-acts.html

This is great, thanks for the enlightenment, this our government really mean us, i wonder how things will be from next if this year that they haven’t started the tax reform things are this hard then i wonder how it will look like next year, the problem with our government is lack of planning, before this tax reform should have been considered they should have first put certain things in place, first what is the overall welfare of the citizens? How many people even have up to #500,000 in their bank account, how many people even have an account to start with? Do our government even have a standard database to checkmate everyone or will it just be a particular percentage of the populace? Lastly this money generated from the taxes hope it will be used for the betterment of the country, it’s not to tax people that are hungry and give the money to those that already have money to share amongst themselves. We are Nigerians and we have been surviving i know somehow we will scale through.