20% of annual rent, capped at N500,000.
Rent relief
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Tax saved
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20% of rent
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What rent relief replaced, and why it matters now
For years a Nigerian taxpayer's biggest automatic deduction was the Consolidated Relief Allowance, a chunky slice of gross income that came off before tax. The Nigeria Tax Act 2025, which took effect in January 2026, retired that single allowance and put a set of itemised reliefs in its place. Rent relief is the one most ordinary employees will feel, because almost everyone pays rent. As modelled here, it lets you deduct 20 percent of the annual rent you actually pay, capped so the deduction never exceeds NGN 500,000 in a year. You always take the lower of those two amounts.
This calculator does two things. It works out the relief itself, and then it shows the tax that relief saves you, which is the part people care about. The saving is not the full NGN 500,000. It is the relief multiplied by the tax rate on the top slice of your income, because the deduction simply shrinks the income that gets taxed at your highest band.
Where the cap bites
The 20 percent figure and the NGN 500,000 ceiling pull in opposite directions, and the cap starts to bind once your annual rent passes NGN 2.5 million. Below that, 20 percent of your rent is under the cap, so you get the full fifth. At exactly NGN 2.5 million rent, 20 percent is NGN 500,000, which equals the cap. Pay more than NGN 2.5 million and the relief stays frozen at NGN 500,000 no matter how high the rent climbs. A tenant in a NGN 6 million flat and a tenant in a NGN 3 million flat receive the identical deduction. The tool flags this by always showing both the raw 20 percent figure and the capped relief side by side.
NGN 2 million rent on a NGN 6 million salary
Load the defaults: annual rent of NGN 2 million and gross income of NGN 6 million. Twenty percent of NGN 2 million is NGN 400,000, which is below the cap, so the relief is the full NGN 400,000. To find the tax saved, the calculator taxes your income with and without the relief. On NGN 6 million the tax is NGN 870,000. Knock NGN 400,000 off and you are taxed on NGN 5.6 million, where the tax is NGN 798,000. The difference, NGN 72,000, is your saving. That equals NGN 400,000 taxed at 18 percent, because the deduction comes off income sitting in the band the rates this calculator applies set at 18 percent.
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Getting the most from the relief
A judgement worth making: rent relief rewards the rent you can document. If your tenancy agreement and receipts are vague, you weaken your claim, so keep the paperwork. For couples, each spouse who pays rent and files separately can claim against their own income, so splitting a tenancy formally can lift the household total above a single NGN 500,000 ceiling. And because the saving tracks your marginal band, the same NGN 400,000 relief is worth more to a higher earner sitting in the 21 or 23 percent bands than to someone whose top slice is taxed at 15 percent.
Does rent relief apply if I own my home or live rent free?
No. The deduction is tied to rent you actually pay to a landlord. If you own outright, live with family, or occupy employer-provided housing without paying rent, there is no rent figure to apply the 20 percent to, so the relief is nil. Homeowners with a mortgage look instead to the separate relief for owner-occupied housing-loan interest, which the new Act treats as its own deduction.
Will my employer apply this automatically through PAYE?
Often, if you declare your rent to payroll, the relief is built into your monthly PAYE so you see slightly more take-home pay rather than a refund at year end. If it is not applied at source, you claim it when you file. Because these mechanics are still bedding in under the 2025 reform, ask your employer how they are handling it and confirm the current rules with your state internal revenue service, which administers personal income tax for most individuals.
Is the NGN 500,000 cap per property or per person?
It is an annual cap on the individual taxpayer, not per tenancy. Renting two places in the same year does not give you two caps. Total your rent, take 20 percent, and the relief is still limited to NGN 500,000 for the year. Treat any figure here as the position the calculator models and verify the live cap with the Federal Inland Revenue Service, now operating as the Nigeria Revenue Service, since reform-era thresholds can shift.