The Nigeria Tax Act 2025, signed into law by President Bola Ahmed Tinubu in June 2025, will officially take effect on January 1, 2026. The law introduces major reforms through three key pieces of legislation — the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act.
These laws aim to simplify Nigeria’s tax system, expand the tax base, and stimulate economic growth while improving transparency and compliance. Below are important Questions and Answers (Q&A) that break down what the new tax law means for individuals, small businesses, and entrepreneurs.
1. Who does the new Nigerian Tax Law apply to?
A: It applies to anyone earning income in Nigeria — including employees, freelancers, remote workers, influencers, traders, and content creators. It also applies to Nigerians earning income abroad if they are residents in Nigeria.
2. Will transfers or deposits in my bank account be taxed?
A: No. Bank transfers, deposits, POS transactions, and withdrawals are not taxable. Only income earned is subject to tax.
3. Will tax authorities monitor business bank accounts more closely?
A: Yes. Authorities will now have better tools to track tax compliance. However, bank balances are not taxed — only profits and income are.
4. I run a one-person business. Do I pay Personal Income Tax or Company Income Tax?
A:
- If your business is registered as an enterprise (business name) — you pay Personal Income Tax (PIT).
- If it is registered as a limited liability company, you pay Company Income Tax (CIT).
5. Who is exempt from paying Personal Income Tax?
A: Anyone earning the national minimum wage or less, or making below ₦800,000 annually, is exempt.
6. Are profits from selling shares taxable?
A: No, if the total value of shares sold is ₦150 million or less and the gain is under ₦10 million. Profits above this threshold are taxable.
7. Will pension income be taxed in 2026?
A: No. All approved pensions and retirement benefits remain tax-exempt.
8. Are military officers’ salaries taxable?
A: No. Military salaries are now exempt from income tax.
9. Will creative professionals still enjoy foreign income tax exemptions?
A: No. Authors, musicians, actors, comedians, and sportspeople must now pay tax on all income earned, both locally and internationally.
10. Are cryptocurrency and digital asset gains taxable?
A: Yes. Profits from cryptocurrencies, NFTs, and other digital assets are now subject to capital gains tax.
11. What are the new Personal Income Tax bands?
| Taxable Income Range (₦) | Tax Rate (%) |
| First ₦800,000 | 0% |
| Up to ₦2.2 million | 15% |
| Up to ₦9 million | 18% |
| Up to ₦13 million | 21% |
| Up to ₦25 million | 23% |
| Above ₦50 million | 25% |
12. Are severance packages taxable?
A: No, if the package is ₦50 million or less. Amounts above ₦50 million are taxed using the progressive tax bands above.
13. Are dividends or rent earned abroad taxable?
A: No. Dividends, rent, interest, or royalties earned outside Nigeria are exempt from tax if repatriated through approved banks.
14. Are agricultural businesses exempt from tax?
A: Yes. Companies involved in crop production, livestock, forestry, dairy, and cocoa processing enjoy a five-year tax holiday from their start date.
15. Are federal or state government bonds taxable?
A: No. All government-issued bonds remain tax-exempt.
16. What does ‘rent relief’ mean under the new law?
A: From 2026, taxpayers can claim rent relief of 20% of annual rent paid, capped at ₦500,000.
For example, if your annual rent is ₦5 million, 20% equals ₦1 million, but you can only claim ₦500,000.
To qualify, you must declare your rent details to the tax authorities.
17. Will small businesses pay Company Income Tax?
A: No. Companies with an annual turnover below ₦50 million are exempt from Company Income Tax.
18. Are remote workers for foreign companies taxable?
A: Yes. Remote workers living in Nigeria and working for international organisations will pay Nigerian income tax, unless the organisation’s country of operation has a tax exemption treaty with Nigeria.
Key Note
The Nigeria Tax Act 2025 introduces a modern, simplified, and more inclusive tax structure aimed at improving compliance and stimulating economic activity. While some new taxes apply to digital assets and global income, the law provides clear exemptions and reliefs for low-income earners, pensioners, and small businesses.
