In case you haven’t heard, there is a new tax policy in Nigeria and it is going to be effective from January 1, 2026. Here is everything you need to know.
This tax overhaul is considered the biggest in decades sweeping changes to personal and corporate taxes, administration, digital compliance, exemptions and the structure of how taxes are collected in Nigeria.
- What Laws Changed?
President Bola Tinubu signed four major tax reform bills into law in June 2025:
- Nigeria Tax Act (NTA)
- Nigeria Tax Administration Act (NTAA)
- Nigeria Revenue Service Act (NRSA)
- Joint Revenue Board Act (JRBA)
These laws modernise, unify and simplify Nigeria’s tax code.
- When Does It Start?
The reforms take effect January 1, 2026. Officials gave a six-month transition period for public education, capacity building and system alignment before implementation.
3: Personal Income Tax (PIT): What Changes in 2026
One of the biggest changes in Nigeria’s 2026 tax reform is how personal income tax will be calculated. The old system relied heavily on reliefs and deductions that many people didn’t fully understand. From 2026, Nigeria is moving to a clear, progressive income tax structure, meaning the more you earn, the higher your tax rate, while low-income earners are protected.
Under the new law, any Nigerian earning ₦800,000 or less in a year will pay zero personal income tax. This is a major shift and is designed to ease the burden on low-income workers, artisans and entry-level employees.
For those earning above ₦800,000, income will be taxed in bands, not all at once. This means only the portion of your income that falls within a specific band is taxed at that rate and not your entire salary. The tax rates start at 15% for income just above ₦800,000 and gradually rise to a maximum of 25% for very high earners making above ₦50 million annually.
Another important change is the removal of the Consolidated Relief Allowance (CRA). In its place, the government introduced targeted reliefs, most notably a rent relief. Taxpayers can now deduct up to ₦500,000 or 20% of rent paid in a year (whichever is lower) from their taxable income. This is meant to reflect real living costs, especially in urban areas.
The new policy also provides relief for people who lose their jobs. Compensation for loss of employment is now tax-exempt up to ₦50 million, offering a safety net during periods of unemployment or company downsizing.
Overall, the goal of these changes is to make personal income tax fairer, easier to understand and more reflective of real income levels. Low earners pay nothing, middle-income earners pay less than before and high earners contribute more all under a simpler and more transparent system.
4. Tax Identification Number (TIN)
From 2026, a TIN will be mandatory for individuals and businesses for financial interactions, registration and compliance including banking activities and government transactions or fine would be paid.
Final Thoughts
Nigeria’s 2026 tax reform marks a major shift toward a fairer, more modern tax system designed to support economic growth while easing the burden on low- and middle-income earners. By introducing progressive income tax rates, expanding exemptions, reducing corporate taxes and simplifying administration under a unified framework, the reforms aim to encourage compliance, attract investment and help small businesses thrive.
However, the changes also place greater responsibility on individuals and businesses to stay informed, register properly, keep accurate records and prepare ahead of full implementation. For Nigerians, the key to benefiting from the new tax regime lies in understanding how it applies to their income or business and taking early steps to align with the new rules before January 2026.
