Personal Income Tax (PIT)

Personal Income Tax (PIT) is levied on the income of individuals, including employees, self-employed persons, and partners in a partnership. Under the Nigeria Tax Act (NTA) 2025, PIT applies to residents on their worldwide income and to non-residents on income derived from Nigeria. The NTA 2025 replaced the Personal Income Tax Act (PITA) Cap. P8 LFN 2004 and introduced significant changes to rates, bands, and reliefs effective from the 2025 tax year.

One of the most significant changes under NTA 2025 is the introduction of a ₦800,000 annual tax-free threshold. This means individuals earning ₦800,000 or less per annum pay no income tax at all. This replaces the previous minimum tax rules under PITA and provides substantial relief to low-income earners. For employees, this means monthly income up to ₦66,667 is completely exempt from tax.

The CRA under NTA 2025 is calculated as: ₦200,000 + 20% of Gross Income. This is deducted from your gross income before applying the graduated tax bands. Previously under PITA, the CRA was ₦200,000 or 1% of gross income (whichever is higher) plus 20% of gross income. The NTA 2025 simplification removes the "1% or ₦200K" comparison.

After applying the CRA and all allowable deductions, the taxable income is applied to these bands: • First ₦300,000 — 7% • Next ₦300,000 — 11% • Next ₦500,000 — 15% • Next ₦500,000 — 19% • Next ₦1,600,000 — 21% • Above ₦3,200,000 — 24% Note: The top rate was reduced from 24% to match the NTA 2025 provisions. The previous PITA top rate was 24%.

Beyond the CRA, the following deductions apply: • National Housing Fund (NHF): 2.5% of basic salary • National Health Insurance Scheme (NHIS): 5% of basic salary • Pension contributions: Up to 8% of basic + housing + transport • Life insurance premiums on own life • Gratuities, superannuation schemes, and widows/orphans schemes • Mortgage interest on owner-occupied residential property (limited) Charitable donations to approved organisations are deductible up to 10% of assessable income.

PIT returns are filed with the relevant State Internal Revenue Service (SIRS) for employees and self-employed individuals, or the Federal Inland Revenue Service (FIRS) for residents of the FCT and certain categories. Filing deadline: Within 90 days of the end of the assessment year (typically 31 March for calendar-year taxpayers). For employees on PAYE, the employer deducts and remits monthly. Annual returns confirm the total deductions match the actual liability.

• Late filing: ₦50,000 for the first month plus ₦25,000 for each subsequent month • Failure to file: ₦50,000 penalty plus the outstanding tax plus interest at the prevailing CBN minimum rediscount rate • Understatement of income: Additional assessment plus penalties