Nigeria’s ₦800,000 Tax-Free Band Is Not a Gross-Salary Cutoff
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Two different rules explain the figures in the latest NRS clarification on Nigeria tax-free income. One sets a 0% rate on the first ₦800,000 of chargeable income. The other exempts income from a job that pays no more than the national minimum wage. That distinction matters because ₦70,000 a month adds up to ₦840,000 over a year.
At a Gombe symposium, NRS regional administrator Danjuma Manga said people earning ₦800,000 or less annually would pay zero personal income tax. He also said minimum-wage earners at ₦70,000 monthly or below are exempt. The Nigeria Tax Act 2025 shows why these are separate tests: one applies to chargeable income after reliefs, while the other covers minimum-wage employment income.
How Nigeria tax-free income is calculated at the ₦800,000 band
The Fourth Schedule to the Nigeria Tax Act 2025 sets a 0% rate on the first ₦800,000 of taxable income. The schedule first accounts for reliefs and exemptions under section 30. So, the band is not a simple ceiling on a person’s gross annual salary.
Section 30 lists deductions that can change the calculation. These include qualifying pension, National Housing Fund and health insurance contributions, life insurance premiums, and interest on a loan for an owner-occupied home. Rent relief also covers 20% of rent paid, up to ₦500,000, if the taxpayer meets the Act’s requirements. Therefore, each worker’s chargeable income depends on their own situation and records.
Why the ₦70,000 monthly exemption is a separate test
Section 162(1)(t) exempts employment income if a worker’s gross pay from that job is at or below the national minimum wage. Section 58 also excludes minimum-wage earners from the standard rate schedule. The State House announced a ₦70,000 monthly minimum wage in July 2024. At twelve months, that figure totals ₦840,000. However, it does not change the separate ₦800,000 zero-rate band.
What workers should check on a PAYE calculation
In practice, employees can ask how payroll calculated chargeable income. Which eligible deductions did it include? What records did the employer use? Does the minimum-wage exemption apply to this employment income? The rule concerns personal income tax under the Act; it does not create a blanket exemption from every tax or charge.
The Joint Revenue Board has published Personal Income Tax Guidelines for 2026. It also offers a PAYE calculator for estimates. Use the calculator as a guide; the relevant tax authority makes the final determination based on the taxpayer’s circumstances. If a deduction looks wrong, ask the payroll team or state revenue service for its calculation and legal basis.
Separately, this personal income tax relief does not determine when other levies may begin. CrispNG’s explainer on the proposed fuel tax outlines why the government has not announced a start date for that measure.
Sources: Punch report of the NRS clarification; Nigeria Tax Act 2025; State House announcement of the ₦70,000 minimum wage; Joint Revenue Board 2026 guidelines.