Taxbox Naija
Personal Income Tax Calculator - 2025 Tax Reform
The 2025 Tax Reform marks a transformative chapter in Nigeria's fiscal landscape. The overhaul of existing legislation is designed to modernise and simplify the country's tax system, with the aim of enhancing revenue generation and promoting equity.
Key Changes for Individuals:
- ✓Tax Exemption: First ₦800,000 of income is completely tax-free
- ✓Progressive Rates: New simplified tax brackets: 15%, 18%, 21%, 23%, and 25%
- ✓Simpler Structure: Tax calculated directly on gross income with clear brackets
- ✓Lower Burden: Middle-income earners benefit from higher exemption threshold
🎉 First ₦800,000 is TAX FREE! If you earn ₦800,000 or less annually, you pay no income tax.
| Annual Income (₦) | Tax Rate |
|---|---|
| ₦0 – ₦800,000 | 0% (Tax-free) |
| ₦800,001 – ₦3,000,000 | 15% |
| ₦3,000,001 – ₦12,000,000 | 18% |
| ₦12,000,001 – ₦25,000,000 | 21% |
| ₦25,000,001 – ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
* This is a progressive tax system - each bracket rate only applies to income within that range.
Progressive taxation means each tax rate only applies to income within that specific bracket, not your entire income.
Example: For a gross annual income of ₦5,000,000:
- First ₦800,000 → ₦0 (0% - Tax free)
- ₦800,001 – ₦3,000,000 (₦2,200,000) → ₦330,000 (15%)
- ₦3,000,001 – ₦5,000,000 (₦2,000,000) → ₦360,000 (18%)
- Total Tax = ₦0 + ₦330,000 + ₦360,000 = ₦690,000
- Effective Tax Rate = 13.8%
Under the Nigerian tax system, certain contributions and expenses can be deducted from your gross income before calculating tax. These reduce your taxable income, resulting in lower tax payable.
| Deduction Type | Details |
|---|---|
| Pension (PFA) Contribution | Mandatory employee contribution (typically 8% of basic salary) |
| NHIS Contribution | National Health Insurance Scheme contributions |
| NHF Contribution | National Housing Fund (2.5% of basic salary) |
| Home Loan Interest | Interest paid on owner-occupied residential property loans |
| Life Insurance Premium | Premiums paid on life insurance policies |
| Rent Relief | Capped at ₦500,000 or 20% of annual rent (whichever is lower) |
- •Pensions & Gratuities: Terminal benefits and retirement income are exempt
- •Compensation for Loss of Office: Up to ₦50,000,000 is tax-exempt
- •Dividend Income: May be subject to withholding tax only
- •Income Below Threshold: Earnings ₦800,000 or less per year are tax-free
Disclaimer
This calculator provides estimates based on publicly available information about the Nigeria Tax Reform 2025. The actual gazetted versions may contain variations. Please consult a qualified tax professional for official tax advice and planning.
📜 Official Documents
Useful Links
💡 Did You Know?
The new 2025 Tax Reform exempts individuals earning ₦800,000 or less per year from personal income tax. This means if you earn about ₦66,667 or less monthly, you don't pay income tax!