Nigeria’s New Tax Laws Explained: What the 2026 Income Tax Reform Means for Workers, Businesses & Investors

Nigeria Tax Reform 2026

Nigeria has entered a new era of tax administration with a major overhaul of personal and corporate taxation. These reforms aim to improve fairness, expand the tax base, strengthen non-oil revenue, and create a more predictable environment for businesses and investors.

Key Personal Income Tax (PIT) Changes

Low-income exemption: Individuals earning ₦800,000 or less annually are fully exempt from PIT.
Rent relief: 20% of annual rent (up to ₦500,000) now replaces the old Consolidated Relief Allowance.
Global income taxation: Nigerian residents are taxed on worldwide income.
Progressive tax bands: Higher earners face higher marginal tax rates.
Compensation for loss of office: Exemption threshold raised from ₦10 million to ₦50 million.

How the Reform Affects Salaries

Lower-income earners experience minimal deductions.
Middle- and high-income earners pay higher progressive rates.
Deductions remain for pension, NHF, health insurance, and rent.
System avoids sudden jumps and improves predictability.

Business & Corporate Tax Reforms

Small company relief: Firms with turnover ≤ ₦50m enjoy CIT exemptions.
Standard corporate rate: 30% applies beyond the small-company threshold.
Electronic Money Transfer Levy (EMTL): ₦50 levy shifts from receiver to sender.
Capital Gains Tax: Companies’ CGT rises from 10% to 30%.
VAT incentives: Expanded zero-rated goods; full input VAT recovery.
Electronic Fiscal System: Mandatory real-time VAT reporting.
Fossil fuel surcharge: 5% levy on petrol and diesel.

New Tax Administration Rules

Mandatory Tax ID for individuals and businesses.
Quarterly reporting of large bank transactions.
Joint Revenue Establishment Act improves federal-state coordination.
Independent Tax Ombud introduced.

Why this reform matters: It strengthens non-oil revenue, improves fiscal stability, supports infrastructure investment, and creates a clearer operating environment for SMEs, corporates, and investors.

Official Sources & Further Reading

Nigeria Tax Act 2025 (Official Gazette):
https://tat.gov.ng/Nigeria-Tax-Act-2025.pdf
Ernst & Young – Nigeria Tax Act Highlights:
EY Tax Alert on Nigeria Tax Act
Personal Income Tax Calculator (New Law):
Nigeria PIT Calculator

Final Thoughts

These reforms mark Nigeria’s most significant tax restructuring in decades. While the new framework improves fairness and predictability, it is not merely about tax relief for individuals. The deeper question is how rising compliance costs and new levies may influence commodity prices, business behavior, and the overall cost of living — and whether the increased revenue collected will be deployed transparently and effectively for national development.

Understanding these changes early empowers workers, entrepreneurs, and investors to adapt strategically, protect their income, and position themselves ahead of long-term economic shifts.

Further Resources for Nigerians

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