For years, the consolidated relief allowance sat quietly behind every PAYE calculation, reducing taxable income before any rate applied. That allowance is now gone.
Abolished from 1 January 2026, alongside the rest of the change brought in by the Nigeria Tax Act 2025.
What the allowance used to do
The consolidated relief allowance worked in the background. Before a band's rate applied to anyone's income, this allowance had already reduced the figure the bands were calculated on.
Because it applied broadly, most employees never had to think about it directly; a payroll system simply built it into the sum.
What replaced it
Two things stepped into its place. First, the bands themselves now start with a tax-free slice at the bottom of the ladder, doing part of the job the old allowance did, but as an explicit band rather than a hidden deduction.
Second, targeted reliefs cover specific situations instead of one broad allowance. 20% of annual rent paid, capped at ₦500,000 is the clearest example: it reduces taxable income, but only for someone who can show they are actually paying rent, up to ₦500,000.
Why the change happened this way
Folding relief into a tax-free band, rather than a separate calculated allowance, makes the sum easier to follow on a payslip. An employee can see the tax-free amount as the bottom rung of the same ladder the rest of the bands sit on, instead of a separate figure calculated elsewhere and then fed into the bands.
Targeted reliefs work differently again. Rather than assuming every employee needs the same broad allowance, a targeted relief like rent relief only applies where the underlying cost, in this case rent, is actually there and documented.
Why this matters for your payslip
A payslip that still shows a line for the old allowance is out of date. Since 1 Jan 2026, that calculation should no longer appear at all.
The practical effect varies by income and rent. Someone with documented rent may end up in a similar place to before; someone without it now relies on the tax-free band alone, with no general allowance sitting underneath it.
What didn't change
Employers still deduct PAYE at source and remit it monthly, and state revenue services still do the collecting for most employees. Only the relief side of the sum moved; the mechanics of deduction and remittance carried on as before.
The six bands themselves are also unaffected by this specific change. Whatever relief applies, or does not apply, the same bands and rates in the 2026 PAYE bands explained take over once the taxable figure is settled.
Where to read more
For the bands this change now sits inside, see the 2026 PAYE bands explained. For the specific steps to claim the main replacement relief, rent relief on PAYE: how to claim it covers what documentation is involved.
The rest of this series, including a fuller old versus new PAYE comparison, is collected in the PAYE and state tax hub.