₦800,000 Tax-Free: The Biggest Change for Low-Income Earners
The single most impactful change in the Nigeria Tax Act 2025 for everyday Nigerians is simple: the first ₦800,000 of your annual chargeable income is taxed at 0%[1].
This means if you earn ₦800,000 or less per year, you owe zero personal income tax.
How Did We Get Here?
The Old System (Before NTA 2025)
Under the old Personal Income Tax Act (PITA), Nigeria used the Consolidated Relief Allowance (CRA) system:
CRA = ₦200,000 OR 1% of gross income (whichever is higher) + 20% of gross income
After CRA, remaining income was taxed from the very first Naira at 7%For someone earning ₦800,000/year under the old system:
CRA: ₦200,000 + ₦160,000 = ₦360,000
Taxable income: ₦440,000
Tax owed: approximately ₦38,800
Effective rate: 4.85%The New System (NTA 2025)
First ₦800,000: 0% tax
Tax owed: ₦0
Effective rate: 0%That's a complete tax elimination for low-income earners[2].
Who Benefits Most?
Earners Under ₦800,000
Zero tax liability — compared to ₦10,000-₦40,000 under the old system
This includes many domestic workers, part-time earners, small traders, and junior employeesEarners Between ₦800K and ₦4M
Significant reduction in effective tax rate
The 0% bracket shields the first ₦800K regardless of total income
Combined with the lower first bracket (15% vs old 7%-11%-15% structure), most middle-income earners pay lessHigher Earners (₦10M+)
Still benefit from the ₦800K 0% bracket
But higher brackets (21%, 23%, 25%) may result in similar or slightly higher tax compared to the old system
The trade-off: simpler calculation, no CRA complexityPractical Examples
Ade — Street Food Vendor
Annual income: ₦720,000
Tax under old PITA: ~₦28,000
Tax under NTA 2025: ₦0
Savings: ₦28,000/yearBola — Junior Developer
Annual income: ₦3,600,000
Tax under old PITA: ~₦475,000
Tax under NTA 2025: ₦420,000
Savings: ~₦55,000/yearChika — Senior Consultant
Annual income: ₦15,000,000
Tax under old PITA: ~₦2,600,000
Tax under NTA 2025: ~₦2,670,000
Difference: ~₦70,000 more (but simpler calculation, no CRA paperwork)Important: "Chargeable Income" Not "Gross Income"
The ₦800K threshold applies to chargeable income — your income after allowable deductions. This matters because:
Start with gross income
Subtract allowable business expenses
Subtract pension contributions, NHF, NHIS
Subtract Rent Relief (20% of rent, max ₦500K)
Result = chargeable income
Apply 0% to first ₦800K of this amountThis means even someone earning ₦2,000,000 gross could have chargeable income below ₦800K after deductions, paying zero tax[3].
What This Means for Filing
Even if your income is below ₦800K and you owe no tax, you may still be required to file a return:
If you have a TIN, file even if the amount is ₦0
Filing establishes your tax history and compliance record
It protects you from presumptive assessmentsThe Bottom Line
The ₦800K tax-free threshold is a genuine improvement for most Nigerian taxpayers. It simplifies the system, eliminates the CRA calculation entirely, and provides meaningful relief to low-income earners.
If you're unsure where you fall, use the TaxJeje PAYE calculator to see your exact tax under the new brackets.
Calculate Your Tax Free →
References
References
- Fourth Schedule, Nigeria Tax Act 2025 - Personal income tax brackets
- [KPMG - Nigeria Tax Act 2025 PIT Changes](https://assets.kpmg.com/content/dam/kpmg/ng/pdf/2025/06/The%20Nigeria%20Tax%20Act%20(NTA),%202025.pdf)
- Section 30, NTA 2025 - Allowable deductions from chargeable income
