January 2026 has kicked off, and with it comes a major tax reboot in Nigeria, the first big overhaul in years. The way we pay tax on income, transfers and even rent relief has changed. While some of it feels confusing, the goal is to protect everyday Nigerians.
Let’s break it down as simply as possible.
- The New Tax System Started on January 1, 2026
The Federal Government confirmed that the new tax laws signed into law in June 2025 are now in effect from January 1, 2026. These reforms were designed to modernise how taxes work in Nigeria and replace older, complicated rules with a more unified system.
This means if you’re earning income, doing business, or sending money, some things you were used to have changed.
- Most Nigerians Will Pay Less or No Income Tax
Let’s start with the good news: The tax system now has a progressive structure that gives real breathing room to low-income earners. Under the new law, minimum wage earners and those earning up to N800,000 a year are exempt from income tax, that means no PAYE deductions for earners within this group.
The tax still exists, but it’s designed to be fairer and not punish low earners.
So, if you’ve been worrying about ridiculous tax bites early in the year, this change might actually lessen your burden.
- Rent Relief Replaces Some Old Deductions
The old “Consolidated Relief Allowance” (CRA) that reduced taxable income has been removed but it wasn’t scrapped without replacement. There’s now a rent relief system which gives a deduction of either up to N500,000 or 20% of the annual rent you pay, whichever is lower.
This helps urban workers who pay rent reduce their taxable income in a way that makes more sense.
- Savings and Transfer Rules Got Smoother
There has been lots of talk online about new charges when you send money, insinuating that bank balances will be taxed or that transfers will cost double. That’s not what the law actually say.
The simple truth is that bank balance is not taxed, the tax system does not charge you simply for holding money.
Yes, there will be a small stamp duty on transfers, but this replaces older levies that used to affect money movement. Sending money across accounts may look slightly different, but this isn’t an entirely new or random tax.
- Some Confusion Is Normal, But There Are Tools to Help You Understand Your Tax
Because this is a major shift, misinformation has spread, for example, a claim that everyone earning above N800,000 will automatically pay 20% tax, which is not true under the new system.
The truth is that the new tax rates are progressive, meaning only income above certain thresholds gets taxed at higher rates, not your whole income.
Yes, 2026 has brought real changes to the way taxes work in Nigeria. Some parts are new, while some are updates and clarifications on existing rules.
The goal is to make the tax system simpler, fairer, and more efficient.
Though it may take a few months for everyone to fully understand it, you can start by knowing that:
- Your income bracket matters now more than ever.
- Low earners get relief.
- Rent gets special consideration.
- Transfers won’t sneak-charge you without reason.
To get fully informed and navigate your taxes with confidence, check Sterling’s One Tax Shop and stay informed.
