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Personal Income Tax (PIT)

Direct TaxLast Updated: 2026-01-06

Introduction to Personal Income Tax

Personal Income Tax (PIT) is a direct tax levied on the income of individuals, communities, families, and trustees. It is governed by the Personal Income Tax Act (PITA) Cap P8 LFN 2004 (as amended by the Personal Income Tax (Amendment) Act 2011).

Whether you are an employee, a self-employed entrepreneur, or a freelancer, contributing your fair share is essential for national development.

Who Collects It?

  • State Internal Revenue Service (SIRS): For individuals residing in a specific state (e.g., LIRS for Lagos).
  • Federal Inland Revenue Service (FIRS): For residents of the FCT (Abuja), members of the Armed Forces, Police, and Non-Residents.

Why Pay PIT? (The Benefits)

Compliance isn't just about avoiding trouble; it opens doors:

  • Tax Clearance Certificate (TCC): Mandatory for government contracts, visa applications, and running for political office.
  • Civic Responsibility: Your taxes fund public infrastructure, healthcare, and security.
  • Avoid Penalties: Filing ensures you don't accrue heavy fines or interest.

PIT Rates: The Progressive System

Nigeria uses a Progressive Tax System, meaning higher earners pay a higher percentage.

| Taxable Income Band | Rate | | :--- | :--- | | First ₦800,000 | 0% | | Next ₦2,200,000 (Up to ₦3M) | 15% | | Next ₦9,000,000 (Up to ₦12M) | 18% | | Next ₦13,000,000 (Up to ₦25M) | 21% | | Next ₦25,000,000 (Up to ₦50M) | 23% | | Above ₦50,000,000 | 25% |

Minimum Tax

If you have no taxable income (due to high reliefs) or your tax is very low, a Minimum Tax of 1% of Gross Income applies.

Good News: Employees earning the National Minimum Wage or less are fully exempt from paying PIT, though they may still file to get a TCC.

Key Exemptions & Reliefs

The Consolidated Relief Allowance (CRA) has been abolished.

New Rent Relief: You can now claim a relief on rent paid for your primary residence.

Lower of 20% of Rent Paid OR ₦500,000

Tax Exempt Items: The following are deducted before tax is calculated:

  • National Housing Fund (NHF) contributions.
  • National Health Insurance Scheme (NHIS) contributions.
  • Life Assurance Premiums.
  • Pension contributions.

How to File Your Returns

For Employees (PAYE)

Your employer automatically deducts tax from your monthly salary (Pay-As-You-Earn). However, you must still file Form A annually by March 31st to declare all income sources.

For Self-Employed / Direct Assessment

  1. Register: Obtain a Taxpayer Identification Number (TIN) from the JTB or FIRS.
  2. Calculate: Determine your tax liability after deducting reliefs.
  3. File: Submit your Self-Assessment forms via the relevant state portal (e.g., e-Tax for Lagos) or FIRS TaxPro-Max (for FCT/Non-residents).
  4. Pay: Remit funds via bank or online platforms.

Frequently Asked Questions

What happens if I move states?

PIT is based on residency. You pay tax to the state where you reside on January 1st of the assessment year.

Can I get a refund if I overpaid?

Yes, the law allows for refunds of excess tax paid, though the process requires an application to the relevant tax authority.

What is the penalty for not filing?

Failure to file returns attracts a fine (e.g., ₦5,000 for individuals) plus interest on the unpaid tax.

References & Resources