Methodology

How we interpret the law.

Every number on TaxWahala comes from a plain reading of the Nigeria Tax Act 2025 and the Tax Administration Act 2025, both effective 1 January 2026. Here is exactly what we assume, so you (or your accountant) can check our work.

Personal income tax (PAYE)

• Bands: first ₦800,000 at 0% · next ₦2,200,000 at 15% · next ₦9,000,000 at 18% · next ₦13,000,000 at 21% · next ₦25,000,000 at 23% · above ₦50,000,000 at 25%. Each rate applies only to income inside its band.
• Minimum wage exemption: gross income up to ₦840,000/year (₦70,000/month) is treated as fully exempt from PAYE.
• The old CRA is gone: the Consolidated Relief Allowance from the previous regime no longer applies under the 2025 Act.
• Rent relief: 20% of annual rent, capped at ₦500,000, deducted before applying the bands.
• Other deductions: pension (including voluntary), NHF and NHIS contributions you actually pay are deducted from gross income to get taxable income. The "auto 8%" pension option estimates the statutory employee contribution as 8% of basic + housing + transport; you can always type your real figure.

Side hustle & freelance income

• Employment income and business/freelance profit are combined and taxed through the same personal bands.
• Freelancers are taxed on profit: income minus legitimate business expenses.
• Residents are taxed on worldwide income — foreign-currency earnings are converted to naira first.

Companies

• Small company: turnover ≤ ₦100M and fixed assets ≤ ₦250M and not a professional-services provider → 0% CIT, exempt from capital gains tax and from the development levy. Registration and filing are still required.
• Known drafting conflict: Section 202 of the Nigeria Tax Act uses a ₦50M turnover figure for "small company", while Section 147 of the Tax Administration Act says ₦100M. Practitioner consensus (and this site) applies ₦100M — but if your turnover is between ₦50M and ₦100M, the calculator warns you to confirm with a professional before relying on 0%.
• Standard company: 30% CIT plus 4% development levy on assessable profits. For simplicity we apply both to the profit figure you enter — real assessable profit involves adjustments a professional should confirm.
• Sole traders are not companies: profit is taxed through the personal bands.

The "old law vs new law" line on your receipt

• We recompute your tax under the pre-2026 regime: Consolidated Relief Allowance = the higher of ₦200,000 or 1% of gross, plus 20% of gross; then the old bands (7% on the first ₦300k, 11% on the next ₦300k, 15% and 19% on the next ₦500k each, 21% on the next ₦1.6M, 24% above ₦3.2M); with the old 1%-of-gross minimum tax floor.
• Statutory deductions you entered (pension, NHF, NHIS) are applied in both regimes; rent relief exists only in the new one. The difference is printed on your receipt.

VAT & withholding tax

• VAT is 7.5%. "Price + VAT" multiplies by 1.075; "VAT inside a total" divides by 1.075.
• WHT rates shown follow the 2025 deduction-at-source regulations (goods 2%, construction 2%/5%, professional fees 5%/10%, dividends/interest/rent 10%, individual royalties 5%/10%).

Penalties & deadlines

• Late payment 10% of unpaid tax + interest · failure to file ₦100,000 first month then ₦50,000/month (§101) · failure to register ₦50,000 then ₦25,000/month (§100) · failure to deduct WHT: 40% of the amount not deducted (§105) · deducting but not remitting: the tax itself + 10% per annum + interest at the CBN rate (§107) · false declaration ₦1,000,000 + tax underpaid (§124). All from the Tax Administration Act 2025.
• PAYE remittance by employers: 10th of the following month (state IRS). VAT & WHT returns: 21st of the following month. PAYE annual return: 31 January. Company returns: 6 months after year-end. Objections: 30 days from an assessment notice. Tax clearance certificates: within 14 days of request.

What this tool is not

TaxWahala is an estimation and education tool. It is not tax advice, and it is not affiliated with FIRS or any state revenue service. Edge cases (benefits-in-kind, capital allowances, pioneer status, treaties, state-specific practice) need a professional. Where the law allows more than one reading, we choose the plainest one and say so here.

Sources we checked against

• Nigeria Tax Act 2025 and Nigeria Tax Administration Act 2025 (official gazette)
• PwC Worldwide Tax Summaries — Nigeria (bands, minimum-wage exemption, residence rules)
• Baker Tilly Nigeria — 2025 Tax Reform Acts explained (small company scope, development levy, VAT zero-rating)
• EY Tax Alert — Nigeria Tax Act 2025 highlights
• Practitioner analyses of the §202/§147 small-company drafting conflict and the NTAA penalty regime.

Spotted an error? Email peter@taxwahala.com — corrections ship fast.

Last updated: January 2026 · Accuracy audit: July 2026