Nigeria's PAYE system changed structure, not just numbers, from 1 Jan 2026. The old system and the new one calculate relief in genuinely different ways.
This guide compares the two systems by structure. Where a source does not give a verified old figure to compare against, it says so rather than guessing.
What changed at the relief system
Under the old law, a consolidated relief allowance was worked out and subtracted from income before any band applied. Abolished from 1 January 2026.
In its place, the new system starts with a tax-free band on the first slice of income, and adds targeted reliefs on top, such as 20% of annual rent paid, capped at ₦500,000, rather than one general allowance calculated in advance.
What changed in the law itself
The Nigeria Tax Act 2025 replaced several older tax laws at once, including the Companies Income Tax Act, Personal Income Tax Act, Petroleum Profits Tax Act, VAT Act, Capital Gains Tax Act and Stamp Duties Act. Personal income tax, which PAYE sits under, used to be governed by its own separate Act; it is now part of this single consolidated law.
Administration, registration and penalties moved to a second Act passed alongside it, the Nigeria Tax Administration Act 2025.
What the registry can't compare
This guide draws only on verified figures. The registry behind it does not carry the old law's specific band percentages or the exact consolidated relief allowance formula, so this comparison does not restate them from memory.
What can be said with confidence: the old system used a smaller, differently shaped set of bands together with the allowance described above, and the new system uses six bands topped by 25%, with reliefs handled separately rather than folded into one allowance.
What stayed familiar
Employers still deduct PAYE at source and remit it monthly. State revenue services still do most of the collecting for employees, just as before. What moved is the maths behind the deduction, not who is responsible for making it.
The idea of a personal tax return has not disappeared either; only the schedule of rates and reliefs feeding into it changed. Anyone who understood the old system's shape can pick up the new one quickly, since it is still a set of income bands with a relief mechanism sitting alongside them.
Why the comparison matters in practice
An employee moving jobs, or an employer updating payroll software, is the person most likely to actually compare the two systems side by side. For them, the practical question is rarely "was the old system better" and much more often "is this new payslip correct".
That question is answerable today, even without the old figures: run the current salary through the 2026 PAYE bands explained and check the result against the payslip. A mismatch is worth raising with payroll directly, band by band.
Checking your own position under the new rules
Rather than trying to reconstruct an old payslip for comparison, it is more useful to check today's figure directly. The PAYE calculator applies the current bands to any salary, and how PAYE is calculated step by step walks through the method behind it.
For related state-level detail, our guide to Lagos State tax filing covers how state revenue services fit alongside these national bands. The rest of this series sits in the PAYE and state tax hub.