Nigeria’s New Tax Law: What Workers, Entrepreneurs, and Investors Need to Know Before 2026

The Federal Government’s Nigeria Tax Act 2025, signed into law by President Bola Ahmed Tinubu in June, is set to take effect on January 1, 2026. The landmark reform—comprising the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act—is designed to streamline the tax system, expand the tax base, and boost national revenue while easing compliance for businesses and individuals.

The new legislation aims to modernize tax collection, enhance transparency, and create a more equitable system for workers, content creators, remote employees, SMEs, and corporate bodies operating within Nigeria.

Below are key questions and answers explaining what the new tax law means for individuals, small businesses, and investors:

Who Does the New Tax Law Apply To?

The 2025 Tax Law applies to all individuals earning income in Nigeria, including employees, freelancers, traders, influencers, content creators, and remote workers. It also applies to Nigerian residents earning income abroad.

Will Bank Transfers or Deposits Be Taxed?

No. Moving money between accounts through POS, bank transfers, deposits, or withdrawals is not taxable. What will be taxed is income—that is, money you earn from work, business, or investments.

Will the Tax Authorities Monitor Bank Accounts More Closely?

Yes. The new tax administration framework allows authorities to track income and verify tax compliance more efficiently. However, your bank balance itself will not be taxed—only your profits and earnings.

How Are One-Man Businesses Taxed?

• If your business is registered as an enterprise (business name), you will pay Personal Income Tax (PIT).

• If registered as a limited liability company, you are required to pay Company Income Tax (CIT).

Who Is Exempt from Personal Income Tax?

Individuals earning the national minimum wage or below ₦800,000 annually are completely exempt from paying personal income tax.

Will Profit from Selling Shares Be Taxed?

No—as long as the total value of shares sold is less than ₦150 million and the gain does not exceed ₦10 million. Anything above these thresholds will be subject to capital gains tax.

Will Pensioners Pay Tax on Their Pension Income?

No. All approved pension and retirement benefits remain tax-free under the 2025 tax framework.

Are Military Salaries Still Tax-Exempt?

Yes. Military officers and personnel will continue to enjoy full tax exemption on their salaries.

Do Creatives and Influencers Pay Tax on Foreign Earnings?

Yes. Creative professionals—such as musicians, actors, authors, comedians, and athletes—are now required to pay Nigerian tax on income earned both within and outside Nigeria.

Are Crypto and NFT Profits Taxable?

Yes. Gains from cryptocurrency trading, NFTs, and other digital assets are now subject to taxation under the new law.

What Are the New Progressive Tax Bands?

The 2025 Tax Law introduces revised tax brackets to ensure higher earners contribute a fairer share:

Will Severance Packages Be Taxed?

If your severance package is ₦50 million or below, it will be tax-free. Any amount above ₦50 million will be taxed according to the progressive tax rates listed above.

Are Dividends or Rents Earned Abroad Taxable?

No. Dividends, rent, royalties, or interest earned outside Nigeria are exempt if they are repatriated through approved financial institutions in Nigeria.

Are Agricultural Businesses Taxed?

No. New agricultural companies—covering crop production, livestock, forestry, dairy, and cocoa processing—will enjoy a five-year tax holiday from the start of operations.

Are Government Bonds Taxable?

No. Income from federal and state government bonds remains fully exempt from tax.

What Is Rent Relief Under the New Law?

From 2026, individuals can claim a 20% rent relief on their annual rent payment, capped at ₦500,000.

For example, if you pay ₦5 million yearly in rent, 20% equals ₦1 million—but the law limits your deduction to ₦500,000. To qualify, taxpayers must declare their rent payments to the appropriate tax authority.

Are Small Companies Exempt from Tax?

Yes. Companies with annual turnover below ₦50 million are exempt from paying corporate taxes under the new law.

Will Remote Workers Be Taxed?

Yes. Remote workers residing in Nigeria who work for international companies will pay Nigerian taxes, except if a tax treaty or diplomatic exemption applies between Nigeria and the host country.

When Will the Law Take Effect?

The Nigeria Tax Act 2025 and all related laws will officially take effect on January 1, 2026, giving businesses and individuals time to update their records and align with the new tax compliance rules.

Takeaway for Nigerians

The Nigeria Tax Law 2025 represents one of the most sweeping tax reforms in recent years. It introduces clarity, fairness, and structure into the country’s tax framework—helping small businesses grow, reducing loopholes, and ensuring higher-income earners pay their fair share.

With digital tax monitoring, cryptocurrency taxation, and progressive relief measures, the law aims to strengthen Nigeria’s revenue system while creating a more transparent and business-friendly environment.