Rent relief has been part of how salaries are taxed in Nigeria since 1 January 2026, when the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 took effect. It lets an employee claim 20% of the rent they pay in a year, up to a maximum of ₦500,000, and it replaced the old Consolidated Relief Allowance (CRA) that used to sit on payslips. If you pay rent and you’ve never told your employer about it, that receipt in your drawer could be worth more than you think.
How 20% of your rent comes off the income that gets taxed
Rent relief doesn’t hand you cash. It reduces the part of your income that tax is charged on, so the saving depends on how much rent you pay and which tax band your income falls into.
Say your yearly rent is ₦1,200,000. Twenty per cent of that is ₦240,000, which is under the ₦500,000 cap, so the full ₦240,000 comes off your taxable income. If the top slice of your income is taxed at 15%, that works out to ₦36,000 less tax over the year, or about ₦3,000 a month. If your rent is ₦2,500,000 or more, 20% of it reaches ₦500,000, and that’s as high as the relief goes. For someone whose top slice is taxed at 18%, a relief of ₦500,000 means ₦90,000 less tax in the year.
Those are illustrations, not a calculation of your own pay, because pension and other deductions also change the final figure. Even so, a few thousand naira a month is worth claiming, especially if you’ve been wondering why your market list still costs so much.
The first ₦800,000 of chargeable income isn’t taxed at all
Rent relief sits alongside new personal income tax bands. Under the Act, PAYE is charged on yearly chargeable income like this.
| Yearly chargeable income | Tax rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 | 15% |
| Next ₦9,000,000 | 18% |
| Next ₦13,000,000 | 21% |
| Next ₦25,000,000 | 23% |
| Above ₦50,000,000 | 25% |
Each rate only applies to the slice of income inside its band. Someone with a chargeable income of ₦3,000,000 a year pays nothing on the first ₦800,000 and 15% on the next ₦2,200,000, which comes to ₦330,000 for the year. Employment income is also exempt where the employee’s gross income from that job is at or below the national minimum wage, currently ₦70,000 a month.
Your employer will want to see proof before it counts
Rent relief isn’t applied automatically just because you pay rent. It needs documentation, such as a rent receipt, a lease or tenancy agreement, or a rent declaration your employer has approved. Other deductions, including pension contributions, health insurance, life insurance premiums and mortgage interest, are also claimed in writing, so it helps to keep those papers together.
National Housing Fund (NHF) deductions are also now voluntary for private sector employees, so an employer shouldn’t keep taking them without the employee’s consent. If yours still appears on your payslip and you didn’t agree to it, ask your payroll team about it.
Take your rent receipt to HR before the next payroll closes
The simplest move is to look at your most recent payslip, check whether any rent relief has been applied, and send your HR or payroll team a copy of your rent receipt or tenancy agreement if it hasn’t. Ask them how they want the claim made. If your situation is more complicated, for example if you have more than one source of income, speak to a qualified tax adviser before you rely on any figure here. Every naira you keep this way can go towards your ajo contribution for December or next year’s rent.
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