Personal Income Tax (PIT) Nigeria 2026: Key Amendments and What They Mean for You

Personal Income Tax (PIT) affects virtually every working Nigerian — from salary earners in Lagos banks to self-employed artisans in Kano. The Nigeria Tax Act 2026 (NTA 2026) has introduced several important amendments to the PIT regime, revising tax bands, consolidating reliefs, and tightening employer obligations. This article distils everything you need to know about the new PIT framework, effective from the 2026 year of assessment.

Who Pays Personal Income Tax in Nigeria?

PIT is governed by the Personal Income Tax Act (PITA) , as amended and consolidated within the NTA 2026. It applies to:

• •Individuals in paid employment (salary earners, public servants, domestic workers earning above the threshold)
• •Sole proprietors and self-employed persons (traders, artisans, freelancers, consultants operating as individuals)
• •Partners in partnerships (each partner is taxed individually on their share of partnership profits)
• •Trustees and executors of estates, in respect of income distributed to beneficiaries
• •Residents of the Federal Capital Territory, Abuja (for whom the NRS administers PIT directly; for other states, the respective State Internal Revenue Service administers PIT)

The New PIT Tax Bands (2026)

The NTA 2026 introduces revised graduated tax bands, significantly increasing the tax-free threshold while adjusting the upper brackets:

Key change: The NTA 2026 has raised the top marginal rate from 24% (unchanged) but widened the bands to provide relief to middle-income earners. The first ₦500,000 is taxed at only 7%, providing meaningful relief at the lower end compared to previous years. Additionally, the consolidated relief allowance has been recalibrated (see below).

Consolidated Relief Allowance (CRA) and Tax-Free Income

Under the NTA 2026, the PIT computation begins with gross emolument (salary, allowances, and benefits-in-kind), from which deductions are made to arrive at the taxable income. The key reliefs are:

1. Consolidated Relief Allowance (CRA)

The CRA is calculated as the higher of:

• •₦500,000 per annum, OR
• •20% of gross earned income, PLUS the prevailing national minimum wage

For the 2026 assessment year, the CRA computation incorporates the national minimum wage of ₦70,000 per month (₦840,000 per annum) for salary earners, as prescribed under the National Minimum Wage Act.

2. National Housing Fund (NHF) Contributions

Mandatory NHF contributions (2.5% of basic salary) are deductible for PIT purposes.

3. National Health Insurance Scheme (NHIS)

Compulsory health insurance contributions are fully deductible.

4. Pension Contributions

Statutory pension contributions under the Pension Reform Act (8% employee contribution, 10% employer contribution) are deductible, with the employee portion reducing taxable income and the employer portion being tax-exempt in the employee's hands.

5. Life Insurance Premiums

Premiums paid on life insurance policies for the taxpayer or their spouse are deductible.

6. Gratuities and Retirement Benefits

Gratuities and lump sums received on retirement remain fully exempt under the NTA 2026.

PIT Calculation: A Real-World Example

Scenario: Mr Chidi Eze is a senior marketing manager at a Nigerian bank, based in Abuja. His annual remuneration package for 2026 is:

• •Basic salary: ₦8,400,000 (₦700,000 per month)
• •Housing allowance: ₦3,600,000 (₦300,000 per month)
• •Transport allowance: ₦2,400,000 (₦200,000 per month)
• •Leave allowance: ₦840,000 (10% of basic salary)
• •Total gross emolument: ₦15,240,000

Step 1: Compute Consolidated Relief Allowance

• •20% of gross income: ₦15,240,000 × 20% = ₦3,048,000
• •Plus minimum wage: ₦840,000
• •CRA: ₦3,048,000 + ₦840,000 = ₦3,888,000
• •This exceeds the flat ₦500,000, so ₦3,888,000 is used

Step 2: Deduct Statutory Contributions

• •Pension (8% of basic + housing + transport): 8% × ₦14,400,000 = ₦1,152,000
• •NHF (2.5% of basic): 2.5% × ₦8,400,000 = ₦210,000
• •NHIS: Assume ₦180,000 per annum (₦15,000 per month)
• •Total deductions (excl. CRA): ₦1,542,000

Step 3: Determine Taxable Income

• •Gross emolument: ₦15,240,000
• •Less CRA: ₦3,888,000
• •Less other deductions: ₦1,542,000
• •Taxable income: ₦9,810,000

Step 4: Apply Graduated Tax Bands

• •First ₦500,000 at 7%: ₦35,000
• •Next ₦500,000 at 11%: ₦55,000
• •Next ₦1,000,000 at 15%: ₦150,000
• •Next ₦2,000,000 at 19%: ₦380,000
• •Next ₦3,000,000 at 21%: ₦630,000
• •Remaining ₦2,810,000 at 24%: ₦674,400
• •Total annual PIT: ₦1,924,400

Mr Eze's effective tax rate is approximately 12.6% of his gross emolument — a reasonable outcome under the progressive band structure.

PAYE Obligations for Employers

The Pay-As-You-Earn (PAYE) system requires employers to deduct PIT from employees' salaries monthly and remit to the relevant tax authority (the NRS for FCT residents; State Internal Revenue Services for state residents). Key employer obligations under the NTA 2026 include:

• •Monthly remittance: PAYE deductions must be remitted by the 10th day of the following month. For example, PAYE deducted in February 2026 must be remitted by 10 March 2026.
• •Annual returns: Employers must file annual PAYE returns (Form H1) by 31 January of the following year, detailing all employees, their gross emolument, deductions, and tax paid.
• •Employee tax cards: Every employer must maintain an individual PIT card for each employee.
• •Terminal benefits: Where an employee leaves employment, the employer must compute and remit any outstanding PIT within 30 days.

Employer Penalties

• •Late remittance of PAYE: Interest at CBN MPR + 10%, compounded monthly
• •Failure to file annual returns: ₦500,000 penalty for corporate employers; ₦50,000 for non-corporate employers
• •Failure to deduct PAYE at source: The employer becomes personally liable for the undeducted amount

Self-Employed Persons and Direct Assessment

Self-employed individuals must file PIT returns under the Direct Assessment system. The NTA 2026 has introduced a more structured approach:

• •Presumptive tax: For informal sector operators with turnover below ₦5 million per annum, a presumptive tax of ₦5,000 per month applies, payable at the point of trade licence renewal
• •Filing deadline: Self-employed individuals must file PIT returns by 31 March of each year for the preceding year's income
• •Books and records: Self-employed persons must keep proper books of account and retain them for 6 years
• •Electronic filing: The NRS now accepts electronic PIT filing for self-employed individuals via the ITAS portal

Filing and Payment Deadlines Summary

Key Amendments to Note in 2026

1. •Wider tax bands: The lower brackets have been expanded, reducing the effective tax rate for middle-income earners
2. •Enhanced CRA: The integration of the national minimum wage (₦70,000/month) into the CRA computation provides additional relief
3. •Presumptive tax for informal sector: A simplified ₦5,000/month presumptive tax for micro-businesses with turnover below ₦5 million
4. •Digital filing mandate: Electronic filing via ITAS is now compulsory for all categories of PIT taxpayers
5. •Stricter employer sanctions: Increased penalties for PAYE non-compliance, including potential criminal liability for wilful defaulters

Key Takeaways

• •PIT applies to all individuals earning income in Nigeria, including salary earners and the self-employed
• •The graduated band system taxes income at rates ranging from 7% to 24% under the NTA 2026
• •The Consolidated Relief Allowance shields a significant portion of income from tax — ensure you claim all eligible reliefs
• •Employers bear strict PAYE obligations with monthly remittance requirements and severe penalties for default
• •Self-employed persons must file by 31 March annually and maintain proper records
• •The new presumptive tax simplifies compliance for micro-businesses

Personal Income Tax compliance is now more digital and more stringent than ever. Taxee helps individuals compute their PIT accurately, generate PAYE schedules, and file returns directly with the NRS. Know your numbers, pay your fair share, and avoid the costly consequences of non-compliance.