How the 2026 New Tax Regime Affects Your Salary

As of January 1, 2026, the Nigeria Tax Act 2025 has completely changed how your take-home pay is calculated. The goal of this new regime is to reduce the burden on low-income earners while streamlining deductions. Here are the two biggest changes our calculator factors in:

• The ₦800,000 Tax-Free Threshold: Under the new law, the first ₦800,000 of your annual income is taxed at 0%. This means if you earn ₦66,667 or less per month, you are fully exempt from personal income tax.

• The 20% Rent Relief (Capped at ₦500,000): The old “Consolidated Relief Allowance” has been replaced. You can now deduct 20% of your annual rent from your taxable income, provided the deduction does not exceed ₦500,000. This makes it crucial to keep your official rent receipts for verification.

Frequently Asked Questions about 2026 Taxes

How is Personal Income Tax calculated in 2026? The calculation follows a progressive bracket system managed by the Nigeria Revenue Service (NRS). First, your statutory deductions (Pension at 8%, NHF at 2.5%, and your 20% Rent Relief) are subtracted from your Gross Income. The remaining “Chargeable Income” is then taxed in stages: 0% for the first ₦800k, 15% for the next ₦2.2m, and up to 25% for high earners.

Is there a separate VAT calculator? While this tool focuses on personal income, it’s important to note that VAT remains at 7.5% in 2026. However, the new regime has expanded the list of “Zero-Rated” items. Basic food, medicine, and education services are now VAT-exempt to help with the cost of living.

Is this an official NRS Tax Calculator? No. This is an unofficial tool provided by The Unofficial NRS Hub for estimation purposes. For official filings, always use the NRS Portal or consult with a Chartered Accountant (ACA).