New Nigerian Tax Law & Rent: What Tenants Must Do Before January 2026 to Save More

Starting January 1, 2026, Nigeria’s tax system will operate under a fully reformed framework, and one of the most practical benefits for everyday people is the Rent Relief provision.

Yes, rent — the biggest monthly expense for millions of Nigerians — is finally getting attention in the new tax regime.

What Exactly Is Rent Relief?

Under the Nigeria Tax Act (NTA) 2025, individuals who pay rent for personal use (residential accommodation) will enjoy a tax deduction of up to 20% of their annual rent, capped at ₦500,000 per year.

This means:

• If you earn above the minimum wage and you pay rent, you can get part of that rent back through reduced PAYE tax.

Important: This is not an exemption from tax. It is a relief,  a legitimate way to reduce your taxable income.

Who Can Benefit?

• Employees under PAYE
• Self-employed individuals under Personal Income Tax
• Nigerians renting accommodation for themselves or their family

Not Allowed:

• Rent for business premises

• Rent of houses you sublet

• Rent paid in someone else’s name without proof

Quick Example — How Much Can You Save?

Note: Higher rent does not mean higher relief once it hits the ₦500,000 cap.

What You’ll Need to Claim It

Start gathering your documents now:

• Rent receipts issued in your name
• Tenancy agreement (active and properly dated)
• Landlord’s name & tax details (if requested)
• Proof of payment — transfers are best
• TIN (Tax Identification Number) — compulsory from 2026

Why Does This Matter?

Because landlords rarely pay tax in Nigeria, renters do.

This reform:

• Reduces the weight on tenants
• Brings landlords into the tax system
• Increases transparency in the housing market

Note: It may also push landlords to start issuing receipts consistently, no more “cash only, no paperwork” situations.

What Employers Must Prepare Before Implementation

Employers will be required to:

• Reconfigure PAYE payroll systems
• Document rent relief claims submitted by staff
• Remit accurate PAYE to NRS (formerly FIRS)
• Maintain audit-proof employee tax records

If you’re a business owner, this is a major change you must handle before 2026.

Red Flags to Avoid (Very Important)

• Inflated rent receipts
• Claiming multiple apartments
• Claiming rent for property owned by you
• Paying rent in cash without evidence

Tax authorities are moving digital, and banks will report high-value rent transfers automatically. No hiding place.

Combine Rent Relief + New 0% Band

Under Section 58 NTA:

•  First ₦800,000 of taxable income is 0%
• Rent relief helps reduce taxable income even further

What This Means

• More take-home pay
• Lower monthly deductions
• Better financial breathing room for Nigerians

Final Word: Start Preparing Now, Not Later

This rent relief is a lawful saving opportunity, but only for those who keep records and organize early.