The Nigeria Tax Act 2025, signed into law by President Bola Tinubu in June, will officially take effect on January 1, 2026.
The law introduces sweeping reforms to streamline Nigeria’s tax system, broaden the revenue base, and promote sustainable economic growth.
The legislation is consolidated into three major components — the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act — each designed to strengthen compliance and simplify tax procedures for individuals and businesses.
To help workers and small business owners understand what the new law means for them, here are key questions and answers compiled from verified resources and tax experts:
Who Does the Law Apply To?
It applies to all individuals earning income in Nigeria — including workers, content creators, influencers, traders, and remote employees.
Nigerians earning income abroad but residing in Nigeria are also covered.
Will My Bank Transfers Be Taxed?
No. Transfers, deposits, or withdrawals are not taxable. Only income earned is subject to taxation.
Will My Bank Account Be Monitored?
Yes, tax authorities will have improved monitoring capabilities for compliance — but balances are not taxed, only profits and income.
I Run a One-Man Business — Which Tax Do I Pay?
If registered as a business name (enterprise), you pay Personal Income Tax.
If registered as a limited liability company, you pay Company Income Tax.
Who Is Exempt from Personal Income Tax?
Anyone earning below ₦800,000 annually or earning the national minimum wage is exempt.
Are Pensioners Taxed?
No. Pension and retirement benefits remain tax-exempt.
Are Military Salaries Taxable?
No. Military officers’ salaries are now tax-exempt under the new law.
Are Crypto and Digital Asset Gains Taxed?
Yes. Profits from cryptocurrencies, NFTs, and other digital assets are now taxable.
Progressive Tax Bands (Effective 2026):
- First ₦800,000 — 0%
- Next ₦2.2m — 15%
- ₦9m — 18%
- ₦13m — 21%
- ₦25m — 23%
- Above ₦50m — 25%
Are Agricultural Businesses Taxed?
No. New agricultural ventures in areas like crop production, livestock, dairy, and cocoa processing enjoy a five-year tax holiday.
Are Government Bonds Taxable?
No. All federal and state government bonds remain tax-exempt.
What Is Rent Relief?
From 2026, individuals can claim 20% rent relief, capped at ₦500,000 annually, provided they declare rent details to the tax authorities.
Are Small Companies Taxed?
No. Firms with a turnover below ₦50 million are exempt from company income tax.
Remote Workers and International Pay:
Remote workers in Nigeria earning from international organizations will pay tax in Nigeria, unless covered by an exemption treaty.
The Nigeria Tax Act 2025 marks a significant shift toward a more transparent and equitable tax system, with clear exemptions and incentives for low-income earners, small businesses, and agriculture. As implementation begins in 2026, experts urge Nigerians to keep accurate records and file tax returns early to benefit from available reliefs and avoid penalties.
