Nigeria 2026 Tax Reform: What Will Change From January 1 and How Nigerians Are Reacting
Date: October 25, 2025 | By: HotGist News
Overview of the New 2026 Tax Policy
Starting January 1, 2026, Nigeria’s sweeping tax reform laws will officially take effect — marking one of the most significant changes in the nation’s tax system in decades. The new reforms were introduced under the Nigeria Tax Act (2025) and its accompanying laws, aiming to modernize tax collection, simplify compliance, and promote fairness in income taxation.
According to the government, these reforms are designed to widen the tax base, reduce leakages, and align Nigeria’s tax policy with international standards while still protecting low-income earners.
Key Highlights of the 2026 Tax Policy
- No tax for low-income earners: Nigerians earning below ₦800,000 annually will be completely exempt from paying Personal Income Tax.
- Progressive tax rates: A new rate structure will apply:
- ₦0 – ₦800,000 → 0%
- ₦800,001 – ₦3,000,000 → 15%
- ₦3,000,001 – ₦12,000,000 → 18%
- ₦12,000,001 – ₦25,000,000 → 21%
- ₦25,000,001 – ₦50,000,000 → 23%
- Above ₦50,000,000 → 25%
- Rent Relief: Taxpayers can now claim rent relief of up to 20% of annual rent or ₦500,000, whichever is lower.
- Employment Compensation Relief: Exemption for compensation on job loss or injury rises from ₦10 million to ₦50 million.
- Small Business Relief: Companies with turnover not exceeding ₦100 million and assets below ₦250 million will be exempt from Company Income Tax and Capital Gains Tax.
- Corporate “Development Levy”: A new 4% levy on assessable profit for medium and large companies replaces older levies such as Education Tax and Police Trust Fund contributions.
- Global Minimum Tax: Multinationals operating in Nigeria will pay at least 15% of their effective profits, aligning with global OECD tax standards.
Government’s Position
The Federal Government maintains that these reforms will strengthen the economy, improve revenue generation, and make taxation more equitable. Officials argue that low-income earners are being protected while ensuring that wealthy individuals and large corporations contribute a fair share.
According to the Ministry of Finance, the new laws will also enhance digital tax administration through the creation of the Nigeria Revenue Service (NRS), which will streamline collection, reduce corruption, and integrate e-filing and e-invoicing for VAT and company tax.
Public Reaction: The View of the Masses
While some Nigerians welcome the idea of exempting low-income earners, others fear that the ripple effect of higher corporate taxes could lead to increased prices of goods and services.
Market traders in Lagos and Port Harcourt expressed mixed feelings. “It’s good that small earners are not taxed,” said a trader, “but companies may shift the burden to us by raising prices.”
On social media, many young Nigerians praised the ₦800,000 exemption as a relief for entry-level workers. However, others argued that the government should focus on taxing luxury and wastage instead of formal jobs alone.
Some critics fear that enforcement could be harsh on small businesses struggling to survive amid rising inflation and fuel costs. “Filing tax returns might become another bureaucratic nightmare,” commented a business owner in Aba.
Experts’ View
Economists from PwC and Nairametrics describe the reforms as a “necessary step” toward fiscal modernization. They believe it will make the system fairer and expand government revenue without directly hurting the poorest citizens.
However, they warn that implementation and clarity will be key — especially for how the government manages electronic invoicing, relief claims, and digital tax audits in 2026.
Conclusion
As Nigeria prepares to roll out the 2026 Tax Policy, citizens and businesses alike are watching closely. For the first time, low-income earners will breathe easier — but medium and high-income earners, as well as corporations, may shoulder higher obligations.
If implemented transparently, the reform could redefine Nigeria’s revenue system for good. But if poorly managed, it risks becoming another policy that benefits the few while burdening the masses.
Tags: Nigeria 2026 Tax Reform, Tax Policy, Tinubu Administration, Personal Income Tax, Corporate Tax, Small Business, Nigerian Economy, Public Reaction