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Nigeria’s 2026 Tax Reforms: What You Need to Know

An overview of recent tax changes and how they affect individuals, businesses, and corporate entities in Nigeria.

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About the Reform

Why the Tax System Changed

The 2026 reform simplifies taxes, protects low-income earners, and modernizes how Nigerians file and report income.

Protect low-income earners

Ensures people earning below the threshold keep more of their income.

Bring digital earnings into the system

Includes freelancing, content creation, crypto, and side gigs in taxable income.

Mandatory annual filing

Every taxpayer must submit a return, regardless of income type.

Close loopholes

Removes grey areas to reduce tax leakage and improve fairness.

Reward long-term investing

Favors investments held over time with clearer, lower tax implications.

Quick overview

What’s Changing...

Low-income earners get relief

Income below ₦800,000 per year is completely tax-free.

Digital income is taxable

Side gigs, freelance work, influencers, and crypto now fall under taxable income.

Property rules simplified

Your primary home is tax-free; rentals and investment property gains are taxed.

Investors rewarded

Long-term government bonds remain tax-free, while short-term securities attract lower, clearer rates.

Annual filing for everyone

All Nigerians must file a tax return, even if income is mixed or informal.

Quick overview

Here’s What To Expect

Now let’s break it down by who you are, employee, freelancer, landlord, investor, or business owner.

Salary Earners

The tax system now gives low-income earners room to breathe so, if you earn less than 800,000 a year, you pay zero tax.

For example, a worker earning 100,000 a month
Annual income: 1,200,000
First 800,000 = 0 tax
Remaining 400,000 × 15% = 60,000 yearly tax
Monthly tax: 60,000 ÷ 12 = 5,000
Monthly take-home: 100,000 − 5,000 = 95,000

The reform finally recognizes that not everyone earns from a 9–5 so, whether you work 9–5, freelance, run a business, earn from rent, or trade in crypto you must file your tax return yearly. This means that digital assets like crypto, side gigs, influencer income, digital assets etc. are now taxable.

For example, if you have 1,000,000 sitting in your current account.
No tax. It’s just sitting there.

But if you move that 1,000,000 into a savings account and it earns 10% interest (100,000)

The 100,000 interest is taxable income. The original money is not.

It’s not about what you own.
It’s about what you earn.

Your main home is protected.

Selling your primary residence = No tax.

But rental income must be declared and gains from selling investment properties (second homes, land, rentals) are taxed at 30%.

The government wants to encourage long-term investing, so State and FGN bonds are tax-free. Short-term bonds and corporate securities have a 10% tax. Large gains from selling shares may be taxed. Income from investments abroad, like dividends or interest, is still exempted.

The law now follows who actually benefits, not just who is listed on paper. So, if you control or benefit from a trust, the income is treated as yours. This includes offshore trusts, family trusts, trusts for minors. So, if the money benefits you in Nigeria, the income is taxable regardless of where the structure sits.

This is one of the biggest updates. Digital assets like cryptocurrencies, NFT gains, digital royalties etc. are now taxable. Some investments in export-focused businesses or startups are tax-free if held for at least two years.

Action Plan for Corporate Entities.

1. Corporate Income Tax (CIT) & Company Classification

The three-tier system (Small, Medium, Large) has been simplified into two categories.

ItemNew ProvisionImpact on Business
Small CompaniesTurnover ≤ ₦100M and fixed assets < ₦250M.0% CIT Rate. Most SMEs are now completely exempt from corporate tax.
Large CompaniesTurnover > ₦100M.30% CIT Rate. Note: The President can reduce this to 25% by 2026 on NEC advice.
Minimum TaxThe old “Minimum Tax” (paying tax even when in loss) is REPEALED.Businesses that make a loss will no longer be forced to pay tax from their capital.


How to Prepare & Take Advantage:

  • Small Businesses: Ensure proper registration and filing of “Nil” returns. Even at 0%, filing is mandatory to maintain compliance and access government contracts.
  • Large Businesses: Budget for the 30% rate but keep an eye on executive orders that may trigger the 25% reduction.

This is perhaps the biggest administrative relief for large corporations.

  • The Law: A single 4% Development Levy on assessable profits replaces four separate taxes: Tertiary Education Tax (3%), NITDA Levy (1%), NASENI Levy (0.25%), and the Police Trust Fund (0.005%).
  • Small Company Exemption: Small companies (Turnover < ₦100M) are exempt from this levy.

How to Prepare & Take Advantage:

  • Operational Efficiency: Consolidate your tax computation. Instead of tracking four different agency deadlines, you now make one payment alongside your CIT. This reduces the risk of “accidental” non-compliance with smaller agencies like NITDA or NASENI.

The rate remains at 7.5%, but the “scope” and “recovery” rules have changed drastically.

  • Expanded Input VAT Recovery: For the first time, businesses can reclaim VAT paid on services and capital expenditure (machinery, office equipment). Previously, you could only reclaim VAT on “raw materials.”
    Zero-Rating: Essential items (basic food, education, medical services, and renewable energy equipment) are now 0% VAT.
    SME Exemption: Small businesses (Turnover < ₦100M) are exempt from charging and remitting VAT.

 

How to Prepare & Take Advantage:

  • Cash Flow Strategy: Service-oriented businesses (like Law firms, Tech hubs, or Banks) should immediately update their accounting software. You can now offset the VAT you pay on your office rent and software subscriptions against the VAT you collect from clients, significantly boosting monthly cash flow.

The new 2024/2025 regulations aim to stop WHT from being a “cost” and return it to being a “prepayment.”

  • Reduced Rates: Professional fees dropped from 10% to 5%.
  • Manufacturing Exemption: Sale of locally manufactured goods is now exempt (0%) from WHT.
  • No-TIN Penalty: If a vendor doesn’t have a valid Tax ID (TIN), you must deduct double the rate.

How to Prepare & Take Advantage:

  • Vendor Audit: Inform your procurement team to demand TINs from every vendor. This avoids the “double tax” penalty and ensures your business isn’t penalized for a vendor’s lack of documentation.

Local Sourcing: If you source from local manufacturers, you no longer need to deduct WHT. This simplifies your accounts payable process.

A new “Global Standard” provision for the biggest players.

  • The Law: Large companies (Turnover > ₦20B) or Multinational Enterprises (MNEs) must maintain a 15% Minimum Effective Tax Rate.
  • Top-up Tax: If your incentives/credits bring your actual tax paid below 15%, you must pay a “top-up tax” to reach that floor.

How to Prepare & Take Advantage:

  • Strategic Tax Planning: Large corporations can no longer “incentive-shop” their way to 0% tax. CFOs should focus on Economic Development Tax Credits (EDTI) which offer 5% annual credits on capital investments but are designed to work within the 15% ETR framework.

Payment Channels

You can settle Federal, State, and IGR payments at any of our branches through the following platforms:

PayDirect

Federal, State, and IGR payments.

Remita

Flexible nationwide payment option.

Remita

Flexible nationwide payment option.

E-Cashier

Flexible nationwide payment option.

2026 Tax Calculator

Estimate your tax under the new rules using your monthly figures.

2026 Tax Calculator

Estimate your tax under the new rules using your monthly figures.

This amount will be treated as a deduction from your taxable income.