I have a basic Nginx docker image, acting as a reverse-proxy, that currently uses basic authentication sitting in front of my application server. I'm looking for a way to integrate it with our SSO solution in development that uses JWT, but all of the documentation says it requires Nginx+. So, is it possible to do JWT validation inside of open-sourced Nginx, or do I need the paid version?
Sure, there are open source codes, which you can use and customize for your case (example).
IMHO there are better implementations, which you can use as an "auth proxy" in front of your application. My favorite is keycloak-gatekeeper (you can use it with any OpenID IdP, not only with the Keycloak), which can provide authentication, authorization, token encryption, refresh token implementation, small footprint, ...