Anxiety trailed the first two working days of 2026 as salary earners, traders and corporate organisations adjusted to a Nigeria’s new tax system that has quietly but fundamentally changed.
Across the country, discussions have centred on the new tax regime, with ordinary Nigerians — particularly low-income earners — raising questions about how the changes affect their income and obligations.
With the commencement of Nigeria’s 2025 tax laws, the country has entered a new fiscal era that the Federal Government describes as fairer, broader and more efficient. The reforms consolidate multiple tax laws, expand digital compliance and aim to close long-standing loopholes.
However, as tax portals went live and compliance deadlines approached, early signals from businesses and taxpayers suggest that while the take-off has been largely orderly, the road ahead may be marked by learning curves, digital challenges and heightened public scrutiny.
Low-income earners largely protected
Analysis of the new tax regime indicates that low-income earners are among the biggest beneficiaries, while higher-income earners shoulder a greater share of the tax burden.
Under the revised tax brackets, salary earners with an annual gross income of ₦800,000 or below — approximately ₦66,667 per month — are exempt from paying personal income tax.
Workers earning between ₦800,001 and ₦2,999,999 annually are taxed at 15 per cent. For instance, an individual earning ₦850,000 per year is expected to pay ₦127,500 annually, translating to ₦10,625 monthly.
Middle-income earners with annual income between ₦3 million and ₦11.99 million are taxed at 18 per cent. A worker earning ₦3 million annually would pay ₦540,000 in tax, or ₦45,000 monthly.
Senior-level employees earning between ₦12 million and ₦24.99 million annually fall under a 21 per cent tax bracket. At ₦12 million annual income, tax payable amounts to ₦2.52 million, or ₦210,000 monthly.
Executive-level earners with annual income ranging from ₦25 million to ₦49.99 million are taxed at 23 per cent. For example, an individual earning ₦25 million annually would pay ₦5.75 million in tax, equivalent to about ₦479,167 monthly.
Top earners with annual income of ₦50 million and above are taxed at 25 per cent. A salary of ₦55 million attracts ₦13.75 million in annual tax, or approximately ₦1.15 million monthly.
Company tax and VAT unchanged
Under the new framework, Value Added Tax (VAT) remains at 7.5 per cent. Company Income Tax (CIT) follows a tiered structure, with small companies eligible for a 0 per cent rate, while larger firms continue to pay up to 30 per cent.
Four laws driving the reform
The reforms are anchored on four major legislations:
The Nigeria Tax Act (NTA) 2025 consolidates several existing federal tax laws into a single framework.
The Nigeria Tax Administration Act (NTAA) 2025 harmonises procedures for tax assessment, collection and enforcement across all levels of government.
The Nigeria Revenue Service (Establishment) Act (NRSA) 2025 replaces the Federal Inland Revenue Service with the Nigeria Revenue Service, granting it broader authority and autonomy.
The Joint Revenue Board (Establishment) Act (JRBA) 2025 strengthens coordination among federal, state and local tax authorities and formalises dispute resolution mechanisms, including the Tax Appeal Tribunal and the Office of the Tax Ombudsman.
Collectively, the laws aim to harmonise overlapping taxes, expand the tax base without sharp rate increases, strengthen enforcement, reduce leakages and digitise tax administration.
Rollout largely calm, but concerns emerge
Initial implementation has been relatively calm in major commercial centres, particularly Lagos. Court rulings cleared legal uncertainties, and tax authorities rolled out updated digital platforms for registration, filing and payments.
However, challenges have surfaced. Many small business owners and individual taxpayers remain unclear about new procedures and compliance timelines. Some users have reported slow portal response times, registration difficulties and data verification issues.
Meanwhile, labour groups, opposition parties and civil society organisations continue to raise concerns about transparency, enforcement powers and the timing of implementation amid ongoing economic hardship.
Analysts warn of teething challenges
Financial analysts note that the coming months will test the reforms in key areas, including the capacity of tax officials at subnational levels, compliance costs for micro, small and medium enterprises, and consistency of enforcement.
Experts warn that without sustained taxpayer education and technical support, resistance could grow, particularly among informal businesses.
Government officials, however, acknowledge that the reforms will face teething problems and say initial enforcement will focus on education and gradual compliance rather than sanctions.
