The short version
From January 2026 Nigeria moved to new personal income tax bands. The first ₦800,000 of yearly taxable income is taxed at 0%, and rates then rise in steps from 15% to 25% for income above ₦50 million. For most people on modest salaries, take-home pay went up. These are example figures as we understand them; confirm with your adviser.
What happened to the old reliefs
The old consolidated relief allowance is gone. In its place there is a rent relief of 20% of rent paid, up to ₦500,000 a year. Pension and NHF contributions still come off before tax.
For most people on modest salaries, the 2026 bands meant more money at the end of the month.
What you need to do in payroll
Make sure your payroll uses the new bands from the January run, collect rent declarations from staff who want the relief, and keep the evidence. Ledgerwise has a simple form staff can fill on their phones.
Checking a payslip by hand
Take yearly gross, subtract pension and NHF, subtract any rent relief, then apply each band in turn. Divide by twelve for the month. Or use the calculator, which does exactly this.
Common mistakes
Applying the new bands to only part of the year, forgetting to update people paid weekly, and not keeping rent evidence. Each one leads to awkward conversations at year end.