How You Will Be Taxed in Nigeria from January 2026 

Nigeria’s tax system is undergoing one of the biggest overhauls in decades, with new laws taking effect from 1 January 2026. These reforms are meant to make taxation fairer, simpler, and more growth-oriented while reducing the burden on low-income earners. 

Personal Income Tax: Progressive and Fairer 

Under the new Nigeria Tax Act 2025, personal income taxes will be calculated using a progressive structure — meaning the rate increases with higher income. 

• ₦0 – ₦800,000 annually: 0% tax — no income tax for most low-income earners.  

• ₦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 structure replaces older rates and thresholds, making minimum wage earners fully exempt and only the higher earners pay noticeable tax — and even then, at a capped 25% top rate.  

Key Reliefs and Deductions 

• The old Consolidated Relief Allowance (CRA) has been abolished.  

• A new rent relief applies, equal to the lower of ₦500,000 or 20% of annual rent.  

• Deductions like pension contributions, housing funds, and insurance premiums still reduce taxable income.  

Tax Residency and Global Income 

Under the reform: 

• Residents are taxed on worldwide income. 

• Non-residents are taxed only on income sourced in Nigeria. 

• Residency is based on the number of days in Nigeria and personal ties.  

Other Taxes Affected 

• Capital Gains Tax is now aligned with personal income tax brackets. 

• Corporate tax, VAT, and other levies are also restructured for better clarity and enforcement. 

“From January 2026, you will feel the impact. Low-income earners will either pay no tax or significantly less, while higher earners contribute a fair share.” — Taiwo Oyedele, Chairman, Presidential Tax Reform Committee 

Starting January 2026, Nigeria’s tax landscape changes significantly: more Nigerians will pay less or no personal income tax, tax brackets will be more progressive, reliefs are clearer, and residents are taxed on global income. The goal is a fairer, simpler, and growth-friendly tax system for all.