Automated Market Makers (AMMs) are a decentralizedDecentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal.
Click to read more → exchangeBusinesses that allow customers to trade cryptocurrencies for fiat money or other cryptocurrencies.
Click to read more → protocol that allows users to trade cryptocurrencies without needing traditional order books. Instead of relying on buy and sell orders placed by users, AMMs use smart contracts and liquidityLiquidity indicates how easy it is to convert a cryptocurrency into cashCash is the most liquid form of money: physical coins and banknotes in the most narrow sense of the term.
Click to read more → quickly — and whether this can be achieved without the assetAssets are the resources that an organization can use to generate revenue or benefit.
Click to read more →’s value suffering.
Click to read more → pools to facilitate trades. If the term “Virtual Automated Market Makers (vAMMs)” has emerged since my last update, it could refer to an evolution or extension of the AMM concept with additional virtual or programmable features. These decentralized exchange protocols utilize liquidity pools and algorithms to enable users to trade digitalDigital technologies are these electronic tools that have the ability to generate, store or even process data.
Click to read more → assets directly from their wallets. Popular examples include Uniswap […]
Click to read more →If you earn an income in Nigeria, whether as an employee, freelancer, or business owner, personal income tax (PIT) affects you.
With the new Nigerian tax reform taking effect on January 1st, 2026, personal income tax rules have changed in important ways. The good news?
Many people will pay less tax, and low-income earners may pay no tax at all.
In this guide, we break down what personal income tax is, how it’s calculated, what income is taxable, and which deductions can reduce what you pay.
What Is Personal Income Tax in Nigeria?
Personal Income Tax is the tax you pay on your personal earnings. This includes:
- Salary and wages
- Freelance and consulting income
- Business profits (sole traders)
- Rental income
- Certain investments and capitalCapital is most commonly defined as the large sum of money you would use to invest.
Click to read more → gainsGains refer to an increase in value or profit.
Click to read more →
Personal income tax is governed by the Personal Income Tax Act (PITA) and administered by the State Internal Revenue Services (SIRS). The 2026 tax reform updates how this tax works, especially the rates and reliefs.
Who Needs to Pay Personal Income Tax?
You’re required to pay personal income tax if you are:
- A salaried worker (PAYE)
- A freelancer or consultant
- Self-employed or a sole proprietor
- A partner in a partnership
- An individual earning rental or investment income
Big ChangeChange — a concept relevant to cryptocurrencies that use the UTXO model — is the number of coins sent back to a user after they use their unspent outputs to initiate a transaction.
Click to read more → in 2026: ₦800,000 Is Now Tax-Free
One of the most important updates under the new tax reform is the tax-free income threshold.
The first ₦800,000 you earn in a year is completely exempt from personal income tax.
This means:
- Many low-income earners will pay zero tax
- Middle-income earners will see reduced tax bills
Personal Income Tax Rates in Nigeria (2026)
Nigeria uses a progressive tax system, which means you only pay higher tax rates on the portion of income that falls into higher bands.
Updated PIT Rates
| Annual Taxable Income | Tax Rate |
|---|---|
| ₦0 – ₦800,000 | 0% |
| ₦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% |
📌You are not taxed at one flat rate. Each portion of your income is taxed separately.
What Income Is Taxable?
The following types of income are generally taxable in Nigeria:
- Monthly salary and bonuses
- Business and professional income
- Freelance and gig income
- Rent received from property
- Capital gains (now aligned with PIT rates)
Deductions That Reduce Your Tax (Very Important)
Before tax is calculated, the law allows certain deductions and reliefs that reduce your taxable income.
Common Allowable Deductions
| Deduction | What It Means |
|---|---|
| Rent Relief | Up to 20% of rent paid (with proof) |
| Pension Contributions | Fully deductible |
| NHF Contributions | Fully deductible |
| NHIS Contributions | Fully deductible |
| Job Loss Compensation | Tax-free up to ₦50,000,000 |
These deductions can make a big difference to how much tax you eventually pay.
How Personal Income Tax Is Calculated (Simple Explanation)
Here’s how your tax is worked out:
- Add up all your income for the year
- Subtract allowable deductions (pension, rent relief, etc.)
- Remove the ₦800,000 tax-free portion
- Apply the tax rates to the remaining income
Example: How Much Tax Will You Pay?
Scenario
- Annual salary: ₦5,000,000
- Pension contribution: ₦400,000
- Rent paid: ₦1,000,000
Calculation Summary
Check out our PIT calculator here.
| Item | Amount (₦) |
|---|---|
| Gross Income | 5,000,000 |
| Pension Deduction | (400,000) |
| Rent Relief (20%) | (200,000) |
| Taxable Income | 4,400,000 |
| Tax-Free Threshold | (800,000) |
| Chargeable Income | 3,600,000 |
Tax Payable
| Band | Tax |
|---|---|
| 15% band | ₦330,000 |
| 18% band | ₦108,000 |
| Total Annual Tax | ₦438,000 |
PAYE vs Self-Assessment: What’s the Difference?
PAYE (Pay As You Earn)
- For salaried employees
- Employer deducts tax monthly
- Tax is sent directly to the state government
Self-Assessment
- For freelancers and business owners
- You file your own tax returns
- You pay tax directly to the tax authority
Capital Gains and the New Tax Reform
Another major update:
Capital gains are now taxed using personal income tax rates (up to 25%), instead of the old flat 10%.
This affects gains from:
- Sale of land or property
- Disposal of certain investments
Why Paying Personal Income Tax Matters
Paying your personal income tax helps fund:
- Roads and infrastructure
- Education and healthcare
- Security and public services
It also helps you:
- Qualify for loans and grants
- Avoid penalties and fines
- Stay compliant with Nigerian law
Quick Takeaways
✔ First ₦800,000 is tax-free
✔ Tax rates range from 15% to 25%
✔ Pension, rent, NHF & NHIS reduce taxable income
✔ Capital gains now follow PIT rates
✔ PAYE and self-assessment both apply
Want an Easier Way to Calculate Your Tax? Check out our PIT Calculator below.