PAYE Under NTA 2025: What Every Salary Earner Should Know

Your Pay Slip Just Changed

If you earn a salary in Nigeria, the Nigeria Tax Act 2025 has rewritten the rules that determine how much tax your employer deducts from your pay. These changes took effect January 1, 2026, and they affect every salary earner in the country.

Whether you're a junior analyst earning N1.2 million a year or a senior manager on N15 million, your take-home pay is calculated differently now. Let's break down exactly what changed and what it means for your wallet.

The New N800,000 Threshold

The single biggest change for salary earners is the new tax-free threshold of N800,000 per year (roughly N66,667 per month).

If your gross annual income is N800,000 or below, you pay zero income tax. Not a reduced rate — literally zero. This replaces the old system where even very low earners paid a minimum tax of 1% of gross income.

What this means in practice:

• Earning N60,000/month? You pay no income tax
• Earning N66,000/month? You pay no income tax
• Earning N70,000/month? You only pay tax on the amount above N800,000/year

This is a massive win for lower-income earners. Previously, the minimum tax rule meant everyone paid something. Now, millions of Nigerians are completely exempt.

The CRA Is Gone

The Consolidated Relief Allowance (CRA) — the formula that gave you a deduction of N200,000 or 1% of gross income (whichever was higher), plus 20% of gross income — has been abolished.

Under the old PITA regime, the CRA was the foundation of every salary earner's tax calculation. Your employer would calculate CRA, subtract it from your gross income, and then apply tax brackets to the remainder.

Under NTA 2025, there is no CRA. Instead, the N800,000 threshold and the new bracket structure do the heavy lifting.

Who benefits from this change?

• Lower earners (under N5M): Generally pay less tax than before
• Higher earners (above N10M): May pay slightly more, depending on deductions
• Everyone: The system is simpler — fewer moving parts, less room for calculation errors

New Tax Brackets

The NTA 2025 introduced a progressive bracket system with rates from 0% to 25%:

The top rate of 25% is lower than the old maximum of 24% under PITA — but it kicks in at N50 million, compared to the old N3.2 million threshold for the 24% rate. The net effect depends on your specific income level.

Rent Relief Still Exists

Good news: you can still claim rent relief under NTA 2025. If you pay rent on your residential accommodation, you can deduct a portion from your taxable income.

The relief is calculated as 20% of your annual rent, up to a cap. To claim it, you need:

• A valid tenancy agreement
• Evidence of rent payment (bank transfer receipt, not cash)
• The landlord's details

Tip: Log your rent payment in TaxJeje under Settings > Tax Relief. We'll automatically calculate the deduction and include it in your PAYE estimate.

Other Deductions You Can Still Claim

Even without the CRA, salary earners can reduce their taxable income with:

1. Pension contributions — mandatory 8% employee contribution to your RSA
2. National Housing Fund (NHF) — 2.5% of basic salary if enrolled
3. National Health Insurance (NHIS) — contributions to the NHIS scheme
4. Voluntary pension contributions — additional contributions above the mandatory 8%
5. Life insurance premiums — premiums on your own life insurance policy

Your employer should already be deducting pension and NHF at source. But if you have voluntary pension contributions or life insurance, make sure your employer knows — otherwise you're overpaying.

How PAYE Actually Works Now

Here's the step-by-step calculation your employer (or their payroll software) should be doing:

1. Start with gross annual income (salary + allowances + bonuses)
2. Subtract allowable deductions (pension, NHF, NHIS, rent relief, life insurance)
3. Check the N800,000 threshold — if the result is N800,000 or below, tax = N0
4. Apply the NTA 2025 brackets to the remainder
5. Divide annual tax by 12 for monthly PAYE deduction

If your employer is still using the old PITA formula with CRA, they're calculating your tax wrong. You have the right to ask for a recalculation under NTA 2025.

Checking Your Employer's Math

This is where TaxJeje comes in. Use our free PAYE Calculator to verify your employer's deductions:

1. Enter your gross monthly salary
2. Add your deductions (pension, rent, etc.)
3. Compare the result with what's on your pay slip

If there's a discrepancy, you have two options:

• Raise it with your HR/payroll department with TaxJeje's calculation as reference
• File a personal return at year-end to claim a refund for overpaid PAYE

What If You Have Side Income?

Many salary earners also earn from freelancing, investments, or small businesses. Under NTA 2025, all your income is aggregated for tax purposes.

If your employer deducts PAYE on your salary, you still need to declare and pay tax on:

• Freelance income
• Investment returns (dividends, interest above exempt thresholds)
• Rental income from property you own
• Capital gains from selling assets

TaxJeje tracks all income streams in one place and calculates your total tax liability across all categories. Your PAYE credits are automatically applied against the total.

Key Dates for Salary Earners

• Monthly: Employer remits PAYE to NRS
• January 31: Employer files annual PAYE returns for the previous year
• March 31: Deadline for personal income tax returns (if you have non-employment income)
• June 30: Extended deadline for certain categories

The Bottom Line

NTA 2025 is generally good news for salary earners — especially those earning under N5 million. The N800,000 threshold means lower earners pay nothing, and the simplified bracket system makes the math clearer.

But "simpler" doesn't mean "automatic." Your employer might get the calculation wrong, especially in this transition year. Use TaxJeje's PAYE calculator to verify your deductions, and log any side income so you're not caught off guard at filing time.

Check your PAYE with our free calculator →