The Federal Government’s comprehensive overhaul of the Nigeria tax system is confirmed and will take effect on January 1, 2026. This major tax reform aims to simplify tax compliance and bring more fairness to the system.
This guide provides the confirmed facts you need to know now, whether you are an individual, an SME, a corporate entity, or an organization.
🧍 For Individuals, Salary Earners, and Freelancers
The key change is the new Personal Income Tax (PIT) structure, replacing the old Consolidated Relief Allowance (CRA).
Confirmed PIT Tax Bands (Taxable Annual Income)
| Annual Income Bracket (₦) | Tax Rate (%) |
| 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% |
- Tax-Free Income: If your annual income is ₦800,000 or less, you pay 0% PIT.
- Rent Relief: You can deduct 20% of your annual rent paid, capped at ₦500,000, to reduce your taxable income.
- Deductible Contributions: Contributions to Pension, NHIS, and NHF remain deductible, provided proper documentation is maintained.
How to Prepare (Individual)
- Claim Reliefs: Keep digital records of rent payments and other deductible contributions for accurate relief claims.
- Verify TIN: Ensure your Tax Identification Number (TIN) is active and correctly linked to your bank and employer.
💼 For Entrepreneurs, Business Owners, and SMEs
The reform provides a clear tax exemption for small businesses, rewarding formalization and growth.
| Your Business Type | Annual Turnover Threshold | Corporate Tax Impact |
| Micro/Small Companies (SMEs) | ₦100 Million or less | 0% Companies Income Tax (CIT) and exempt from the Development Levy. |
| Medium/Large Companies | Above ₦100 Million | CIT remains at 30%, plus a 4% Development Levy on assessable profits (this replaces multiple previous levies). |
Compliance is Key
- Zero Tax Condition: To qualify for the 0% CIT exemption, you must maintain verifiable digital records and proper financial structure.
- Mandatory E-Invoicing: All VAT-registered businesses must adopt Nigeria Revenue Service (NRS) mandated e-invoicing systems. The VAT rate remains at 7.5%.
- Digital Economy: Income from online businesses and freelancers is now clearly within the tax net and subject to PIT or CIT depending on your structure.
🏦 For Corporate Entities & Multinationals
- Minimum Effective Tax Rate (ETR): Large corporations must maintain a minimum effective tax rate of 15% in Nigeria, aligning with global standards.
- Corporate CGT: Capital Gains Tax (CGT) for companies is now 30%, aligning it with the standard CIT rate.
⛪ For Churches, NGOs, and Charitable Organizations
The basic principle of tax compliance for organizations remains:
- Tax-Exempt Activity: Income used strictly for religious or charitable purposes remains tax-exempt.
- Commercial Activity: Income generated from any trade or business activities (e.g., rentals, private schools, etc.) is subject to CIT like any other business. All organizations must register and file returns with the Nigeria Revenue Service (NRS).
✅ Simple Action Plan to Prepare Now
Don’t wait for the Nigeria tax reform deadline. The new system rewards early compliance.
- Go Digital: Adopt accounting software immediately to maintain verifiable digital records and separate business/personal finances.
- Update Systems: If you run payroll, update your software to reflect the new ₦800,000 tax-free threshold and the new targeted reliefs.
- Audit Income: Businesses, Churches, and NGOs must clearly separate commercial revenue from exempt income to avoid surprise assessments.
The Nigeria tax reform 2026 is about transparency. By acting now, you ensure you benefit from the reliefs rather than face penalties.
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