The Nigerian government’s new tax law takes effect on 1st January 2026, bringing changes for individuals, small businesses, and professionals. Here’s everything you need to know in simple Questions & Answers format.
Q1: When will the new Nigeria Tax Act take effect?
A1: The new law takes effect from 1st January 2026.
Q2: Which individuals does it apply to?
A2: All individuals earning income in Nigeria (workers, traders, content creators, influencers, remote workers, etc.), including Nigerians earning abroad if they are tax residents.
Q3: Will bank transfers or deposits be taxed?
A3: No. Moving or keeping money in your account is not taxable. Only income earned (salary, business profits, interest) is taxed.
Q4: Will students with no job pay tax?
A4: No. No taxable income means no tax.
Q5: Will tax authorities monitor business bank accounts?
A5: Yes. Compliance is easier to track, but balances are not taxed—only profits and income are.
Q6: Are loans taxable?
A6: No. Loans are not income and not taxed. Interest earned by lenders is taxed.
Q7: Do small business owners pay personal or company tax?
A7: Sole proprietors pay Personal Income Tax; registered companies pay Company Income Tax.
Q8: Are profits from selling shares taxable?
A8: No, if gains are below ₦10 million and total share value is under ₦150 million. Above these thresholds, gains are taxable.
Q9: Are pensions taxable?
A9: No. Approved pensions and retirement benefits are exempt.
Q10: Are military salaries taxable?
A10: No. Military officers’ salaries are tax-exempt.
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Q11: Do creatives still pay tax on foreign income?
A11: Yes. All Nigerian residents must pay tax on income earned at home and abroad.
Q12: Are crypto and digital assets taxable?
A12: Yes. Profits from crypto, NFTs, and other digital assets are taxable.
Q13: Who is exempt from personal income tax?
A13: Individuals earning below the national minimum wage or under ₦800,000 annually.
Q14: What are the new progressive tax bands?
A14:
First ₦800,000 @ 0%
Next ₦2.2m @ 15%
Next ₦9m @ 18%
Next ₦13m @ 21%
Next ₦25m @ 23%
Above ₦50m @ 25%
Q15: Is severance pay taxable?
A15: No, if ₦50 million or less; above that, taxed using the new progressive bands.
Q16: Are foreign dividends, rent, or interest taxable?
A16: No, if brought into Nigeria through approved channels.
Q17: Are disability pensions taxable?
A17: No. Disability pensions for military or civil service are fully exempt.
Q18: Are agricultural companies taxed?
A18: No. They enjoy a 5-year tax holiday from the start of operations.
Q19: Are government bonds taxable?
A19: No. Federal and state government bonds are exempt.
Q20: What is rent relief?
A20: Individuals can claim 20% of annual rent paid, capped at ₦500,000, if properly declared.
Q21: Will a person earning ₦6m benefit under the new law?
A21: Yes. Tax reduces from ₦896k under the old law to ₦780k under the new law, increasing take-home pay.
Q22: Are small companies taxed?
A22: No. Companies with turnover below ₦50 million are exempt.
Q23: Will remote workers pay tax in Nigeria?
A23: Yes, unless a tax treaty exempts the income.
Q24: Will foreigners earning in Nigeria pay tax?
A24: No, if employed by startups or creative/tech companies and their income is already taxed in their home country.
Bottom Line: The 2026 tax reforms focus on taxing actual income, not bank balances or transfers, while providing reliefs and exemptions for low earners, students, pensioners, and small businesses. Understanding these rules helps Nigerians comply and maximize take-home income.