CRA abolished: what NTA 2025 does to your take-home pay in Nigeria (2026)

For over a decade, the Consolidated Relief Allowance (CRA) was the first thing every Nigerian payroll clerk deducted before working out PAYE. From 1 January 2026, it is gone. The Nigeria Tax Act 2025 (NTA 2025) abolished the CRA and replaced it with a flat ₦800,000 tax-free band, a new Rent Relief, and a completely rebuilt set of tax brackets. This guide explains what CRA was, why it went, what replaced it, and — with the arithmetic shown — whether your take-home pay goes up or down. It pairs with our full PAYE computation guide under NTA 2025.

At a glance: before vs after

Sources: Nigeria Revenue Service (nrs.gov.ng) · EY — Nigeria Tax Act 2025 highlights · PwC — Nigeria individual taxes · Nigeria Tax Act 2025; Finance Act 2020.

1. What the CRA was under the Finance Act 2020

The Consolidated Relief Allowance was a statutory relief every taxable individual received before their income met the tax brackets. Under the Finance Act 2020 (amending the Personal Income Tax Act), it was computed as:

CRA = higher of (₦200,000 or 1% of gross income) + 20% of gross income

The 20%-of-gross component is the part that mattered most: it scaled with salary. Someone on ₦6,000,000 a year received ₦1,400,000 of CRA; someone on ₦50,000,000 received ₦10,200,000. On top of the CRA, statutory deductions — pension, NHF, NHIS, life assurance premiums — were also deducted before the brackets. Whatever remained was taxable income, taxed at the six Finance Act 2020 rates: 7%, 11%, 15%, 19%, 21% and 24%. A minimum tax of 1% of gross applied where the computed PAYE came out lower.

2. Why it was abolished

The CRA-plus-brackets system had two problems the reform set out to fix. First, it was regressive at the top: because the 20%-of-gross slice was uncapped, high earners extracted the largest naira relief, while the ₦200,000 floor did little for low earners. Second, it was opaque — few employees could reconstruct their own PAYE, and the interaction of CRA, reliefs and minimum tax produced disputes.

NTA 2025 replaced the machinery with something a payslip reader can follow: a fixed ₦800,000 tax-free band for everyone, a transparent Rent Relief, and wider, flatter low brackets so that the tax-free effect is built into the rate table itself rather than bolted on as an allowance.

3. What replaced the CRA

Three things now sit where the CRA used to be, effective 1 January 2026:

1. A ₦800,000 tax-free band. The first ₦800,000 of annual income is taxed at 0%. This deliberately covers the full national minimum wage of ₦70,000/month (₦840,000/year is just above it), so minimum-wage earners pay effectively no PAYE.
2. Rent Relief. An employee who declares annual rent gets a deduction of min(20% × annual rent, ₦500,000). Declare ₦1,500,000 rent and the relief is ₦300,000; declare ₦3,000,000 or more and it caps at ₦500,000. Rent Relief is declared through self-service — see our NHF and self-service notes for how election-style fields work.
3. New brackets. The annual bands are:

The minimum tax is gone — there is no 1%-of-gross floor under NTA 2025.

4. Worked comparison: a ₦6,000,000 salary

Take an employee on ₦6,000,000 gross per year (₦500,000/month). To isolate the CRA change, this example ignores pension and other reliefs on both sides.

Before — Finance Act 2020:

CRA = ₦200,000 + (20% × ₦6,000,000) = ₦200,000 + ₦1,200,000 = ₦1,400,000 Taxable = ₦6,000,000 − ₦1,400,000 = ₦4,600,000

Take-home = ₦6,000,000 − ₦896,000 = ₦5,104,000.

After — NTA 2025, with a declared annual rent of ₦1,500,000 (Rent Relief = ₦300,000):

Chargeable = ₦6,000,000 − ₦300,000 = ₦5,700,000

Take-home = ₦6,000,000 − ₦816,000 = ₦5,184,000.

This employee saves ₦80,000 a year (₦896,000 → ₦816,000 tax). Even with no rent declared, the NTA figure is ₦870,000 — still ₦26,000 lower than the old ₦896,000. The CRA shrank, but the wider, flatter low brackets more than make up for it.

5. Who gains and who loses

The reform is progressive: it favours the bottom and middle and costs the top.

• Minimum-wage and low earners gain most. Anyone under ₦800,000/year now pays zero PAYE, and the old 1% minimum tax that used to catch them is abolished.
• Middle earners gain modestly, as the ₦6,000,000 example shows — roughly ₦25,000–₦100,000/year depending on rent declared.
• High earners generally lose. For an employee on ₦50,000,000 gross, Finance Act 2020 gave a CRA of ₦10,200,000 (taxable ₦39,800,000, PAYE ≈ ₦9,344,000). Under NTA 2025 the PAYE on ₦50,000,000 works out to ≈ ₦10,430,000 — about ₦1.09M more — because the fat 20%-of-gross CRA is gone and the top rate rose from 24% to 25%. The crossover from "gain" to "loss" sits in the upper income range, so most salaried staff at SMEs sit on the winning side.

6. Employer payroll implications

The change is not just an employee arithmetic story — it forces concrete payroll actions before your January 2026 run:

1. Retire the CRA line entirely. Any payroll engine still deducting a Consolidated Relief Allowance for 2026 periods is computing the wrong tax. There is no CRA field under NTA 2025.
2. Add a Rent Relief input. Employees must be able to declare annual rent so payroll can apply min(20% × rent, ₦500,000). A blank declaration is not zero rent — treat "not declared" and "declared ₦0" distinctly for audit.
3. Reload the bracket table. Swap 7/11/15/19/21/24 for 0/15/18/21/23/25 and remove the 1% minimum-tax floor.
4. Date-route, don't hard-cut. December 2025 payroll still uses the Finance Act 2020 rules; January 2026 uses NTA 2025. A back-dated December correction run in February must still apply the old CRA. Systems that flip a single global flag get back-dated corrections wrong.
5. Communicate the net-pay change. Most staff will see a small take-home rise; senior staff may see a fall. Tell them before the payslip does.

Common mistakes in the transition

1. Leaving the CRA in the formula. Deducting both the old CRA and the new ₦800,000 band double-relieves and under-taxes.
2. Applying Rent Relief without the cap. It is capped at ₦500,000 regardless of how high the rent is.
3. Using old brackets on 2026 income. The 24% top rate and 7% entry rate no longer exist for 2026 periods.
4. Forgetting minimum tax was abolished. Applying a 1%-of-gross floor in 2026 over-charges low earners.
5. A single global "regime" switch. Back-dated corrections must route by pay-period date, not by the date you run payroll.

Does AnooreHR handle this?

AnooreHR treats the tax regime as profile-driven and date-routed: December 2025 payroll automatically resolves the Finance Act 2020 profile (with the CRA and minimum tax), and January 2026 onward resolves the NTA 2025 profile (₦800,000 band, Rent Relief, new brackets, no minimum tax). Rent Relief is a self-service declaration that flows straight into the PAYE base and the payslip, and every payslip stores a hash of the exact tax profile used — so a back-dated correction always reproduces the rules that were in force for that period. If you want to see the net-pay impact across your headcount before January, book a demo and bring your salary file, or sign up free to model it yourself.

Frequently asked questions

Related: How to compute PAYE under NTA 2025 · NHF is now voluntary under NTA 2025 · See pricing