By Bababunmi Agbebi
Edited by Sunkanmi Adewunmi
Nigeria has just ushered in one of the most significant tax reforms in decades, a set of laws designed to modernise how taxes are collected, who pays what, and how the system works. These changes officially kick in on January 1, 2026, and they will affect individuals, businesses, investors, and even digital asset users across the country.
Whether you’re a salaried worker, a startup founder, or someone earning from side gigs, here’s the story in plain language with a sprinkle of fun where possible!
What Exactly Has Changed? The Big Picture
In June 2025, the government signed four major tax reform laws into effect. These aren’t just tweaks here and there, they overhaul the entire tax system.
The four major laws are:
- Nigeria Tax Act (NTA) – Consolidates old tax laws into one unified code.
- Nigeria Tax Administration Act (NTAA) – Reshapes how taxes are administered and enforced.
- Nigeria Revenue Service Act (NRSA) – Replaces FIRS with the Nigeria Revenue Service (NRS)—a new, modern tax authority.
- Joint Revenue Board Act (JRBA) – Improves cooperation between federal and state tax authorities and introduces new dispute resolution systems.
These laws aim to simplify compliance, boost fairness, close loopholes, and attract more investment to Nigeria’s economy.
New Tax Rules for You (Individuals)
Instead of an old flat system, the new law introduces a progressive tax scale which means you pay more only when you earn more. Plus:
- No tax at all on income up to about ₦800,000 per year, good news for many low-income earners.
- Middle and higher income earners will now face tax bands that stretch from 15% up to 25%, depending on how much you earn.
- There are new deductions, like a 20% rent relief (capped at ₦500,000), pension and health contributions, etc., which lower your taxable income.
In casual terms: The tax law now treats your income more fairly—if you earn little, you pay very little or nothing; if you earn more, you contribute more.
Businesses: What’s New for You
Companies Income Tax & Development Levy
- Small companies earning below ₦50 million annually stay tax-free, a huge incentive for startups and small businesses.
- A 4% Development Levy replaces scattered levies like education, tech, and police levies tidying up a messy old system into one simpler charge.
Multinationals and Big Firms
Foreign firms and companies making tons of money in Nigeria now face:
- A minimum effective tax rate of 15% on profits, a rule aimed at ensuring big global players pay their fair share.
- Capital Gains Tax (CGT) is now aligned with corporate tax rates (up to 30%) and applies to digital assets like crypto and NFTs (with exemptions).
So, if you’re the next big startup, you’ll enjoy tax-free early years but once you grow, you pay more like everyone else.
Digital Age Taxes: Crypto & Online Income
The new law officially brings digital stuff into the tax world. That means:
- Cryptocurrency, NFTs, and other digital assets are taxable gains.
- Freelancers, creators, and gig economy workers must register and file tax returns, no more flying under the radar.
If you’ve been trading crypto on Binance, freelancing online, or earning Side-hustle income, this part really matters.
New Tax Authority (NRS) – Boss Moves Only
The old Federal Inland Revenue Service (FIRS) is out. The Nigeria Revenue Service (NRS) is in with:
- Stronger digital systems for online filing and tracking.
- More power to audit, collect and enforce.
- A special Tax Ombuds Office to protect taxpayers and resolve disputes fairly.
So yes, the tax people will know more about you but they also have new rules about transparency and fairness.
Why There’s So Much Debate Around These Laws
Not everyone is thrilled:
- Some lawmakers say the official published versions of the laws were changed after passing, raising legal questions.
- Civil society groups and legal bodies have urged for suspension or review.
- Critics worry the tax authority has too much power in some areas.
But President Tinubu insists the reforms will go ahead and that they’re not just about collecting more taxes they’re about making the system fairer and more efficient.
So, Who Does It Affect?
| Group | How You’re Affected |
| Low-income earners | Mostly exempt, better scaled tax brackets. |
| Middle & high earners | Progressive tax rates and better reliefs. |
| Small businesses | Strong exemptions and simplified compliance. |
| Large companies | Must pay minimum effective tax; digital gains taxable. |
| Crypto and digital workers | Obliged to register and pay tax on gains. |
| Foreign firms | Subject to new effective minimum taxes and levies. |
Final Word: Is It Good or Bad?
There’s no simple answer. Like a new operating system, it will take time before we know how well it runs in real life.
Good Stuff:
✔ More fairness in tax brackets.
✔ Modern digital tax tracking.
✔ Better incentives for SMEs.
✔ More predictable tax environment for investors.
Challenges:
⚡ Some legal controversies remain.
⚡ Implementation hurdles are expected.
