Personal income tax is calculated by adding all income earned in the year, including business profit, salary, investment income, capital gains, and digital asset profits.
From this total, allowable deductions such as business losses, capital allowances, exempt income, and income already taxed at source are subtracted to arrive at total income.
Further statutory reliefs like pension contributions, NHF, NHIS, mortgage interest, life insurance premiums, and rent relief (20% capped at ₦500,000) are then deducted to determine chargeable income, which is the amount tax rates are applied to.
These deductions must be properly claimed in writing and supported with evidence, otherwise they may be denied, and where records are not properly kept, income may be assessed under a presumptive tax system.
At 2GDB Consulting, we provide structured tax advisory, proper documentation support, and compliance guidance to ensure you never pay more tax than necessary.
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