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.
