Please note
Belmadeng is an independent study platform and is not affiliated with the FIRS / Nigeria Revenue Service (NRS). This is general information, not tax or legal advice — for your situation consult a qualified tax professional. From 1 January 2026 the Federal Inland Revenue Service (FIRS) became the Nigeria Revenue Service (NRS); use only the official portals (nrs.gov.ng and taxpromax.gov.ng), and confirm current rates and rules there.
Who administers it
For most individuals, personal income tax is administered by the State Internal Revenue Service (State IRS) of the state where you reside — not the federal NRS. This is a key point people often get wrong.
What PAYE is
PAYE (Pay As You Earn) is personal income tax on employment income: your employer deducts it from your salary each month and remits it to the relevant tax authority (usually your State IRS).
Self-employed & freelancers
If you’re self-employed or a freelancer, you generally file and pay personal income tax directly (via your State IRS), rather than through an employer’s PAYE. Keep records of income and allowable expenses.
New reliefs for low earners
The 2026 reform revised the tax bands and reliefs, notably easing the burden on lower-income earners (many low earners now pay little or no personal income tax). Exact bands and thresholds are set by the new law — confirm the current figures.
When the NRS handles it
The federal NRS administers personal income tax only for specific groups — for example residents of the FCT, the armed forces and police, foreign-service officers, and non-residents. Most others deal with their State IRS.
Tips
- Know your State IRS — that’s usually who you pay.
- Employees: check PAYE is deducted correctly.
- Freelancers: keep records and file.
A more progressive PIT
Personal Income Tax (PIT) is the tax on an individual's income. The reform makes it more progressive — lower earners are treated more lightly (with reports of full relief at the bottom of the scale), while the top marginal rate rises to 25% for the highest earners. Residency rules were also clarified (broadly, Nigerian residents are taxed on worldwide income, non-residents on Nigerian-source income, with residence tested by ties and a 183-day presence test). Because bands and details are technical and can change, confirm the current PIT bands and reliefs officially or with an adviser.
Rent relief replaces the old allowance
A notable structural change: the old Consolidated Relief Allowance (CRA) has been replaced. In its place is a rent relief — reported as 20% of annual rent, capped (around ₦500,000) — alongside other allowable deductions. This changes how your taxable income is computed compared with the old system, so if you're used to the CRA, your calculation will look different under the new law. Treat the specific figures as indicative, keep evidence of rent paid where you intend to claim relief, and check the current rules before relying on them.
Who collects it
An important practical point: personal income tax for most individuals is collected by your State Internal Revenue Service, not the federal NRS. If you're employed, your employer deducts and remits tax through PAYE (Pay As You Earn) each month; if you're self-employed or a freelancer, you're generally responsible for filing and paying your own PIT to your state authority (often via direct/self-assessment). Keep your TIN and records in order, and note that the Joint Revenue Board exists to harmonise how federal and state systems work together.
Frequently asked questions
Is personal income tax federal or state in Nigeria?
For most individuals it’s administered by the State Internal Revenue Service of where you reside — not the federal NRS.
What is PAYE?
Pay As You Earn — personal income tax on employment income that your employer deducts monthly from your salary and remits to the tax authority (usually your State IRS).
Who administers tax for the self-employed?
Self-employed people and freelancers generally file and pay personal income tax directly through their State IRS, keeping income and expense records.
Are low earners exempt from personal income tax?
The 2026 reform revised bands and reliefs to ease the burden on lower-income earners, with many now paying little or none — confirm the current thresholds.
When does the NRS handle personal income tax?
For specific groups — FCT residents, the armed forces and police, foreign-service officers and non-residents; most others use their State IRS.
How does personal income tax work under the new law?
PIT is more progressive — lower earners are treated more lightly (with reports of full relief at the bottom), while the top marginal rate rises to 25% for the highest earners. Residency was clarified (residents taxed on worldwide income, non-residents on Nigerian-source, with a 183-day test). Confirm current bands and reliefs officially.
What replaced the Consolidated Relief Allowance?
A rent relief — reported as 20% of annual rent, capped (around ₦500,000) — alongside other allowable deductions. This changes how taxable income is computed compared with the old CRA system. Treat the figures as indicative, keep evidence of rent paid, and check the current rules.
What is the top personal income tax rate?
Under the reform the top marginal rate rises to 25% for the highest earners, within a more progressive structure that treats lower earners more lightly. Bands are technical and can change, so confirm the current PIT bands officially or with an adviser.
Who collects personal income tax in Nigeria?
For most individuals, your State Internal Revenue Service — not the federal NRS. Employees have tax deducted and remitted monthly through PAYE by their employer; the self-employed generally file and pay their own PIT to the state authority via self-assessment.
How do freelancers pay income tax?
As self-employed individuals, freelancers are generally responsible for filing and paying their own personal income tax to their State Internal Revenue Service, often via direct/self-assessment. Keep your TIN and records in order, and confirm the current process with your state authority.