What every Nigerian needs to know about the biggest tax reform in years
Nigeria’s New Tax Laws is preparing for a major overhaul of its tax system, and it’s set to begin on January 1, 2026. This new tax regime is one of the most significant changes to the nation’s fiscal framework in decades and aims to make the tax system fairer, structured, and business-friendly.
Whether you’re a salaried worker, entrepreneur, or small business owner, here’s a clear breakdown of what’s happening, why it matters, and how it could affect you.
Why These Tax Reforms Matter
President Bola Ahmed Tinubu and the federal government have insisted that the new tax laws will take effect as planned, starting January 1, 2026, despite some debate and calls for delay. The reforms are described as a “once-in-a-generation opportunity” to strengthen Nigeria’s revenue system and support economic growth.
The aim is not primarily to increase taxes, but to modernise and harmonise the collection and administration of taxes nationwide.
What Exactly Is Changing?
Instead of dozens of separate tax laws, Nigeria is moving to a unified, streamlined system under the new Nigeria Tax Act 2025 and related legislation. This includes changes to personal income tax, company tax, VAT, and tax administration rules. Tax News
Key Highlights of the New Tax Framework
1. Progressive Personal Income Tax (PIT)
Under the new system, tax rates will be tiered based on income levels. Low-income earners will benefit from relief or reduced taxes, while higher earners will pay proportionally more:
| Annual Income Range | Tax Rate |
|---|
| ₦0 – ₦800,000 | 0% (tax-free) |
| ₦800,001 – ₦3,000,000 | 15% |
| ₦3,000,001 – ₦12,000,000 | 18% |
| ₦12,000,001 – ₦25,000,000 | 21% |
| ₦25,000,001 – ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
This means many low and middle-income Nigerians will pay less tax than before, while the wealthiest will contribute more — a structure designed for fairness and growth.
2. Tax Exemptions and Relief Changes
Several important relief measures have been updated:
- Income up to ₦800,000 annually is completely tax-free.
- The old Consolidated Relief Allowance (CRA) has been replaced with a new Rent Relief system.
- Higher exemption thresholds for payouts, such as compensation for loss of employment.
These changes aim to protect lower earners and make tax calculations fairer.
3. Corporate Tax and Business Changes
The reforms don’t just affect individuals — companies are also impacted:
- The Companies Income Tax (CIT) structure has been updated with new rules.
- Some small businesses may be exempt or taxed more favorably.
- The tax system now brings together multiple business levies into a clearer, unified framework.
This simplification makes Nigeria more attractive to investors and reduces the burden of compliance for many enterprises.
4. New Tax Administration and Enforcement Rules
Under the new laws, tax authorities — now operating as the Nigeria Revenue Service (NRS) — will have expanded powers to ensure compliance, speed up collections, and reduce loopholes.
Expect improvements like:
- Digital tax filing systems
- Real-time tax monitoring
- Clearer dispute resolution processes
These advances are designed to make compliance easier and fairer for taxpayers.
What This Means For You
So what does all this look like in practical terms?
Employees & Salaried Workers
- More people will pay zero or reduced personal income tax.
- The tax relief changes aim to give more take-home pay.
Small Business Owners
- Many small enterprises will enjoy tax exemptions or lower rates.
- VAT and compliance requirements are being modernised.
Large Corporations
- A more structured and transparent tax framework means predictable tax planning and fewer overlapping levies.
How to Prepare
- Understand your income bracket under the new system
- Review your business’s tax obligations early
- Adopt digital tax filing tools before the deadline
- Consult a tax professional for personalised planning
These reforms are comprehensive, but early preparation will help you adapt smoothly.
What’s Next?
Despite some debate and legal challenges, the Federal Government has reaffirmed that the tax reforms will begin on January 1, 2026, as planned with or without adjustments.
Whether you’re a salary earner, entrepreneur, or professional, these changes present an opportunity to engage with a more equitable, modern, and transparent tax system.
Have questions about how these tax changes affect you or your business? Share your thoughts below in the comments section, or get in touch with us — and stay informed as Nigeria transitions to this new tax era!