The End of CRA
For over two decades, the Consolidated Relief Allowance (CRA) was the primary way Nigerian taxpayers reduced their taxable income. Under the old PITA, CRA gave you:
₦200,000 OR 1% of gross income (whichever was higher), plus
20% of your gross incomeFor someone earning ₦5,000,000:
CRA = ₦200,000 + ₦1,000,000 = ₦1,200,000 in reliefAs of January 1, 2026, CRA no longer exists. The Nigeria Tax Act 2025 abolished it entirely[1].
What Replaced CRA?
Two things work together to replace CRA:
1. The ₦800,000 Tax-Free Band (0% Bracket)
The first ₦800,000 of chargeable income is taxed at 0%. This is built directly into the tax brackets[2].In effect: Every taxpayer gets ₦800,000 of income tax-free, automatically. No calculation needed, no form to fill.
2. Rent Relief
A new relief specifically for people who pay rent[3]:
20% of annual rent paid
Maximum: ₦500,000
Whichever is lowerRequirements:
You must actually pay rent
You must have evidence (tenancy agreement, rent receipts, bank transfer records)
Homeowners who don't pay rent get no Rent ReliefOld System vs. New System: Side by Side
For a ₦5,000,000 earner paying ₦1,500,000 rent:
Old System (PITA with CRA):
| Step | Amount |
| Gross income | ₦5,000,000 |
| CRA (₦200K + 20% of ₦5M) | -₦1,200,000 |
| Taxable income | ₦3,800,000 |
| Tax (old brackets: 7% to 24%) | ~₦588,000 |
New System (NTA 2025):
| Step | Amount |
| Gross income | ₦5,000,000 |
| Rent Relief (20% of ₦1.5M) | -₦300,000 |
| Chargeable income | ₦4,700,000 |
| First ₦800K at 0% | ₦0 |
| ₦800K-₦3M at 15% | ₦330,000 |
| ₦3M-₦4.7M at 18% | ₦306,000 |
| Total tax | ₦636,000 |
Difference: ₦48,000 more under the new system for this earner.
For a ₦2,000,000 earner paying ₦600,000 rent:
Old System: Tax ≈ ₦100,000
New System: Tax ≈ ₦60,000
Lower-income earners generally pay less under the new system.
Who Wins and Who Loses?
Winners (Pay Less Tax):
Low-income earners (under ₦4M) — the 0% bracket provides more relief than CRA did at these income levels
People with high rent relative to income — Rent Relief can be very effective
Everyone benefits from simplicity — no more complex CRA calculationsNeutral:
Middle-income earners (₦4M-₦10M) — roughly similar tax burden, depending on rent
People who rent at moderate levels — Rent Relief partially offsets CRA lossDisadvantaged:
Homeowners who don't pay rent — they lose CRA and get no Rent Relief
High-income earners (₦25M+) — higher brackets (23%, 25%) and no CRA
People with very low or no rent — CRA was automatic, Rent Relief requires actual rent paymentsWhat About Other Deductions?
CRA was the only relief that was abolished. Everything else remains deductible[4]:
✅ Pension contributions (8% of qualifying income)
✅ NHF contributions (2.5% of basic salary)
✅ NHIS/health insurance premiums
✅ Business expenses (all legitimate business costs)
✅ Life insurance premiums
✅ Capital allowances on business equipmentThese deductions reduce your chargeable income *before* the tax brackets are applied, making them even more valuable under the new system.
Practical Advice
Track your rent payments — If you pay rent, Rent Relief is your biggest automatic relief. Keep your tenancy agreement and payment records
Maximize deductions — With CRA gone, every business expense matters more. Track everything
Consider voluntary pension — 8% pension contributions are fully deductible and help you save for retirement
Don't use old calculators — Any tax calculator using CRA formulas is outdated. Use NTA 2025 bracketsUpdate Your Calculations
If you've been using spreadsheets or old tax formulas that include CRA, they're now incorrect. The new system is simpler:
Chargeable Income = Gross Income – Business Expenses – Pension – NHF – NHIS – Rent Relief
Then apply the 6 brackets: 0%, 15%, 18%, 21%, 23%, 25%.
TaxJeje automatically uses the new NTA 2025 rules — no CRA in sight.
Calculate Your Tax Under NTA 2025 →
References
