Nigeria Tax Act 2025
A Complete Guide to the New Tax Revolution
Nigeria is on the brink of a tax transformation. On 26 June 2025, President Bola Ahmed Tinubu signed the Nigeria Tax Act, 2025 (NTA or the Act), along with three related bills. This landmark legislation, set to take effect on January 1, 2026, promises to reshape the country’s tax landscape and provide significant relief to low-income earners and small businesses.
The New Tax Era Begins
The Nigeria Tax Act 2025 represents the most comprehensive tax reform in Nigeria’s history. President Bola Tinubu on Thursday signed into law the four new tax bills recently passed by the National Assembly, describing the new laws as pivotal to the success of the administration’s reforms and the country’s prosperity.
Four Key Legislative Pieces:
- The Nigeria Tax Act (Ease of Doing Business)
- The Nigeria Tax Administration Act
- The Nigeria Revenue Service (Establishment) Act
- The Joint Revenue Board Act
Who Will Be Affected?
Individuals
- All workers, traditional and gig economy
- Content creators and influencers
- Remote workers
- Traders and entrepreneurs
- Students and low earners (with exemptions)
Businesses
- All registered businesses
- One-man businesses
- Limited liability companies
- Small and medium enterprises
Revolutionary Changes for Low-Income Earners
Historic Tax Exemption
₦800,000First-time legal exemption for those earning this amount or less annually
For the first time in Nigeria’s history, low-income earners—those earning N800,000 or less annually—are legally exempt from personal income tax, as stipulated in Section 58 of the Nigeria Tax Act, 2025. This means that millions of Nigerians, including those earning the national minimum wage, will pay absolutely no personal income tax.
The New Progressive Tax Structure
| Income Bracket | Tax Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2.2 million (₦800,001 – ₦3,000,000) | 15% |
| Next ₦9 million (₦3,000,001 – ₦12,000,000) | 18% |
| Next ₦13 million (₦12,000,001 – ₦25,000,000) | 21% |
| Next ₦25 million (₦25,000,001 – ₦50,000,000) | 23% |
| Above ₦50 million | 25% |
Small Business Revolution
Unprecedented Small Business Support:
- Complete exemption: Businesses with annual turnover under ₦25 million pay 0% Company Income Tax
- Simplified compliance: Small companies are exempt from CIT, CGT and Development levy
- Expanded definition: Small companies defined as those with annual gross turnovers of NGN100million
For larger corporations, Corporate tax rates drop from 30 per cent to 27.5 per cent in 2025 and 25 per cent thereafter.
Investment and Digital Assets
Share Trading
No tax on share sales under ₦150 million with gains under ₦10 million. Aligns Nigeria with global capital market trends.
Cryptocurrency & Digital Assets
Profits from crypto, NFTs, and other digital assets are now taxed, reflecting the growing digital economy.
Government Bonds
Federal and State Government bonds remain completely tax-exempt, encouraging investment in government securities.
Special Exemptions and Reliefs
Military and Security Personnel
- All military salaries remain tax-exempt
- Disability pensions for armed forces personnel are completely exempt
Pensioners
Approved pension and retirement benefits remain exempt from taxation
Agricultural Sector
5-year tax holiday for crop production, livestock, forestry, dairy, and cocoa processing companies
Game-Changing Rent Relief
New Rent Relief Benefit
₦500,000Maximum annual rent relief (20% of annual rent paid)
Changes for Creative Professionals
Major Changes:
- Authors, musicians, and sportsmen no longer enjoy tax exemptions on foreign income
- They must now pay Nigerian tax on income earned both domestically and internationally
Foreign Income Rules:
Dividends, interest, rent, and royalties from abroad are exempt if brought into Nigeria through approved banking channels.
Common Misconceptions Clarified
What’s NOT Taxed:
- Bank transfers, POS transactions
- Deposits or withdrawals
- Money in your bank account
- Borrowed money from institutions
- Moving money between accounts
What IS Taxed:
- Earned income from work
- Business profits
- Investment returns
- Professional fees
- Trading profits
Real-World Tax Savings
₦6 Million Annual Earner Example
Old system: ₦896,000 in taxes
New system: ₦780,000 in taxes
₦116,000Annual savings (13% reduction in tax burden)
💡 Calculate Your Own Tax Savings
Want to know exactly how much tax you’ll pay under the new law? Use our free online calculator to see your personalized tax computation.
🧮 Use Tax CalculatorEconomic Impact and Objectives
The Nigeria Tax Act 2025 aims to:
- Increase Tax Compliance: By making the system fairer and simpler
- Support SME Growth: Through significant exemptions and reliefs
- Modernize Tax Administration: With digital-first approaches
- Boost Economic Growth: By reducing the tax burden on productive sectors
- Improve Income Distribution: Through progressive taxation
What You Need to Do
For Individuals:
- Understand your new tax bracket
- Prepare documentation for rent relief claims
- Update your tax knowledge for 2026 filing
- Consider the impact on financial planning
For Businesses:
- Review turnover to understand applicable exemptions
- Update accounting and tax systems
- Train finance team on new requirements
- Consult with tax professionals
The Road Ahead
The Nigeria Tax Act 2025 represents more than just tax reform—it’s a reimagining of how Nigeria approaches taxation in the 21st century. By prioritizing fairness, supporting small businesses, and modernizing administration, the new law has the potential to:
- Increase voluntary tax compliance
- Reduce the informal economy
- Support entrepreneurship and innovation
- Generate sustainable revenue for government services
- Create a more equitable society
Key Takeaway
For the millions of Nigerians earning ₦800,000 or less annually, the message is clear: you are now exempt from personal income tax. For small businesses, the opportunities for growth without punitive taxation are unprecedented.
Ready to calculate your exact tax liability?
🧮 Tax Calculator 📚 Learn MoreConclusion
The Nigeria Tax Act 2025 marks a historic shift towards a more progressive, business-friendly, and technologically modern tax system. With its emphasis on protecting low-income earners while supporting business growth, the new law represents a balanced approach to taxation that could drive Nigeria’s economic development for years to come.
As January 1, 2026 approaches, both individuals and businesses should prepare for these changes. The new tax regime offers significant opportunities for savings and growth, but successful navigation requires understanding and proper preparation.
The success of this ambitious reform will ultimately depend on effective implementation, taxpayer education, and the government’s commitment to maintaining the taxpayer-friendly provisions that make this law revolutionary.