President Bola Tinubu has signed four new tax reform bills into law, ushering in what the government calls a fairer, simpler, and more digital tax system designed to ease the burden on small businesses, low-income earners, and remote workers.
The freshly signed laws—set to take effect in 2026—bring sweeping changes to Nigeria’s tax structure, from eliminating certain taxes to restructuring how revenue is collected. The reforms are part of the federal government’s push to promote economic growth, expand the tax base, and streamline tax administration nationwide.
Here’s how the new tax laws affect everyday Nigerians:
Key Highlights of the New Tax Laws
✅ Small Businesses Get a Bigger Tax Break
If your business earns ₦50 million or less annually, you will no longer have to pay Company Income Tax (CIT). This is a significant win for micro and small businesses, including food retailers, POS agents, tailors, and other street-level entrepreneurs. Previously, only companies earning ₦25 million or less were exempt from this requirement.
✅ Employees with Small Salaries Breathe Easier
If you earn ₦83,000 or less per month (₦1 million per year), you won’t pay any PAYE (Pay As You Earn) tax. The government’s new position is clear: “You’re trying. Keep your money. We’re not taxing you.”
✅ Even Higher Earners Get Some Relief
For Nigerians earning up to ₦1.7 million monthly, new personal reliefs will lower the amount of PAYE tax deducted from your salary. That means more money stays in your account—whether you choose to save it or enjoy a small jollof is up to you.
✅ ₦50 Million Severance Packages Now Tax-Free
Employees who are laid off, retired, or receive termination benefits will enjoy full tax exemption on the first ₦50 million of their severance package. This provides some dignity and cushion during difficult transitions.
✅ Basic Living Costs Now VAT-Free
Value Added Tax (VAT) will no longer apply to basic food items, baby products, electricity, hospital bills, or school fees. Whether it’s groceries from the market or paying tuition, families can expect some financial relief.
✅ Remote Workers and Freelancers Must Now Pay Tax
If you earn income from abroad—say, $3,000 monthly as a remote developer or designer—you’re now legally required to:
- Register with your state tax authority
- Declare your foreign income in naira
- Pay tax like every other Nigerian earner
And yes, if your Payoneer, Wise, or Barter account is linked to your BVN or local bank, your inflows are now visible to the tax authorities.
✅ Simplified and Unified Tax System Incoming
Rather than dealing with dozens of confusing and overlapping taxes, the new law aims to simplify tax administration. A new body, the Nigeria Revenue Service (NRS), will replace the FIRS with broader powers, increased transparency, and the ability to collect non-tax revenues.
A Joint Revenue Board will also ensure that state and federal tax authorities don’t harass you twice over the same tax issues.
Plus, you now have a right to fairness: a Tax Appeal Tribunal and Tax Ombudsman will be introduced to help resolve disputes without oppression or silence.
How It Affects Your Salary
If you’re employed and earning ₦1.7 million or less per month, your PAYE tax deductions will reduce, meaning your take-home salary will increase. Low-income workers (earning ₦ 83,000 or less per month) won’t be taxed at all under the new reforms.
When Does All This Start?
These reforms are scheduled to take effect in 2026, giving businesses and workers time to adjust, plan, and prepare.
In Summary:
- Small businesses are exempted from CIT up to ₦50m
- Salaries below ₦83k/month are tax-free
- Higher earners will pay less in PAYE tax
- Severance benefits up to ₦50m are tax-free
- VAT removed from essential goods and services
- Remote workers must now register and pay income tax
- The tax system is being digitized and simplified
Bottom Line:
Your take-home pay is likely to increase, especially if you’re currently earning below ₦1.7 million per month. While digital workers and freelancers will face increased scrutiny, most working Nigerians are likely to benefit from a fairer and more transparent tax structure.
This is one reform where—at least on paper—the Nigerian citizen comes first.
