How Much Income Is Tax-Free in Nigeria in 2026?
What you can earn in Nigeria before paying any income tax in 2026, and how rent relief and pension lift that threshold further.
· NairaTax Tax Advisory Team · 6 min read
In Nigeria from 2026, the first ₦800,000 of your annual taxable income is taxed at 0% under the Nigeria Tax Act 2025. Reliefs like the 8% pension deduction and rent relief lower your taxable income further, so your real tax-free gross is higher. Minimum-wage earners on ₦70,000/month are fully exempt.
Key takeaways
- The first ₦800,000 of annual taxable income is taxed at 0% under the Nigeria Tax Act 2025 (NTA 2025), in force from 1 January 2026.
- Taxable income is your gross minus reliefs, so reliefs such as the 8% pension deduction and rent relief push your effective tax-free gross above ₦800,000.
- An employee earning only the national minimum wage of ₦70,000/month (₦840,000/year) pays ₦0 PAYE — fully exempt.
- A worker on ₦150,000/month pays just ₦10,700 monthly PAYE, an effective rate of only 7.1%.
- Being exempt from tax does not always mean exempt from filing — some earners must still submit an annual return.
The ₦800,000 0% band explained
The headline number every Nigerian worker should know is ₦800,000. Under the Nigeria Tax Act 2025, the first ₦800,000 of your annual taxable income is taxed at a rate of 0%. You only start paying tax on income above that line.
Here is the full personal income tax (PAYE) band table that applies from 1 January 2026:
| Annual taxable income | Rate |
|---|---|
| ₦0 – ₦800,000 | 0% |
| ₦800,001 – ₦3,000,000 | 15% |
| ₦3,000,001 – ₦12,000,000 | 18% |
| ₦12,000,001 – ₦25,000,000 | 21% |
| ₦25,000,001 – ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
The crucial word is taxable. The bands are applied to your income after reliefs are deducted, not to your raw gross salary. That single fact is why your true tax-free earnings are higher than ₦800,000 — which we explain next. You can test any figure instantly with the PAYE calculator.
How reliefs push your effective tax-free gross higher
Your taxable income = gross − total reliefs. Because the 0% band applies to taxable income, every naira of relief effectively raises the gross salary you can earn before tax bites.
The main reliefs deducted before the bands are applied:
- Pension — a default 8% of your gross salary.
- Rent relief — the lower of 20% of your annual rent OR ₦500,000.
- NHF (National Housing Fund) contributions.
- NHIS (health insurance) contributions.
- Life-assurance premiums.
- Owner-occupier house-loan interest.
A quick illustration
Take pension alone. If you contribute the default 8% of gross to pension, then to have ₦800,000 of taxable income you can earn a gross of roughly ₦870,000 before any tax applies — the 8% is stripped out first. Add rent relief and the tax-free gross climbs higher still.
Rent relief is worth spelling out. Suppose someone earns ₦400,000/month and pays ₦1,200,000 in annual rent. Their rent relief is ₦240,000 (20% of ₦1.2m, since that is lower than the ₦500,000 cap). That extra relief cuts their monthly PAYE from ₦48,740 down to about ₦45,140 — roughly ₦3,600/month less. See how each relief moves your number with the take-home pay calculator.
The minimum-wage full exemption
There is a second, simpler protection built into the law: minimum-wage earners are fully exempt.
An employee whose income is only the national minimum wage of ₦70,000 per month (₦840,000 per year) pays ₦0 in PAYE. This exemption sits alongside the 0% band and reliefs to ensure the lowest-paid workers carry no income tax burden at all.
So if you are on the minimum wage, your take-home is your full ₦70,000 every month — nothing is deducted for PAYE. You can confirm this on the monthly take-home calculator.
Worked example: who pays ₦0 and who pays 7.1%
Let's put real numbers to it. Both figures below come straight from NairaTax's calculators (monthly gross, default 8% pension, no rent relief).
| Monthly gross | Monthly PAYE | Monthly net | Effective rate |
|---|---|---|---|
| ₦70,000 (min wage) | ₦0 | ₦70,000 | 0% (exempt) |
| ₦150,000 | ₦10,700 | ₦127,300 | 7.1% |
The ₦70,000 earner
At ₦70,000/month, the worker falls under the minimum-wage exemption. After the 8% pension and the 0% band, there is nothing to tax. Monthly PAYE is ₦0, and they keep the entire ₦70,000.
The ₦150,000 earner
At ₦150,000/month (₦1,800,000/year), pension relief is deducted first, and the first ₦800,000 of what remains is still taxed at 0%. Only the slice above the threshold is taxed at 15%. The result is a monthly PAYE of just ₦10,700, leaving ₦127,300 in the pocket — an effective tax rate of only 7.1%.
That low effective rate is the whole point of the reform: even earners comfortably above the exemption line pay a small fraction of their income in tax. Compare more salary levels on the calculators page.
Who still must file even if exempt
An important distinction: being exempt from tax is not the same as being exempt from filing.
If you are a standard PAYE employee whose employer deducts and remits your tax, your monthly PAYE filings are generally handled for you. But you may still have an annual return obligation in cases such as:
- You are self-employed or run a business — you are expected to file even in a loss or low-income year.
- You have more than one source of income (for example, a salary plus freelance or rental income).
- You need a tax clearance certificate (TCC) for a loan, visa, contract or tender.
- The Nigeria Revenue Service (NRS, formerly FIRS) specifically requests a return.
When in doubt, file. A nil or exempt return still creates the record that proves you are compliant. Check upcoming dates on the tax deadlines page.
How we keep this accurate: figures below match NairaTax's calculators, which implement the Nigeria Tax Act 2025.
Authority note: these rules come from the Nigeria Tax Act 2025, administered by the Nigeria Revenue Service (NRS, formerly FIRS). For primary sources, see the Nigeria Revenue Service and the government fiscal reforms portal.
Frequently Asked Questions
Is the first ₦800,000 tax-free in Nigeria?
Yes. Under the Nigeria Tax Act 2025, the first ₦800,000 of your annual taxable income is taxed at 0%. Because taxable income is your gross minus reliefs, the actual gross salary you can earn tax-free is somewhat higher than ₦800,000.
What salary is tax-free in Nigeria 2026?
After the default 8% pension relief, a gross of roughly ₦870,000 per year leaves about ₦800,000 of taxable income, all taxed at 0%. Claiming rent relief and other reliefs raises that tax-free gross even further. Minimum-wage earners are exempt regardless.
Do I pay tax on minimum wage in Nigeria?
No. An employee earning only the national minimum wage of ₦70,000 per month (₦840,000 per year) is fully exempt and pays ₦0 PAYE. The full ₦70,000 reaches your account each month.
How do reliefs increase my tax-free income?
Reliefs are deducted from your gross before the tax bands apply. Pension (8%), rent relief (lower of 20% of annual rent or ₦500,000), NHF, NHIS and life-assurance premiums all shrink your taxable income, so more of your gross salary falls inside the 0% band.
Do I still need to file if I earn below the tax-free threshold?
Sometimes, yes. Standard PAYE employees usually have filings handled by their employer, but the self-employed, people with multiple income sources, and anyone needing a tax clearance certificate should still file an annual return — even a nil or exempt one — to stay on record with the NRS.
How is my taxable income different from my gross salary?
Your gross is your full salary before deductions. Your taxable income is that gross minus reliefs such as pension and rent relief. The PAYE bands, including the 0% band, are applied only to your taxable income — never to your raw gross. Use the PAYE calculator to see both figures for your own salary.
This article is general information, not tax advice. Confirm figures with the Nigeria Revenue Service (NRS) or a licensed tax adviser.