Nigeria’s tax system is about to undergo a major transformation.
As the Nigeria Tax Act (NTA) 2025 prepares to take effect in 2026, the Federal Government has assured citizens that the reforms are designed to be fair, inclusive, and transparent.
To clear confusion and misinformation, the committee has released answers to frequently asked questions by Nigerians. Below is a simple breakdown of what the new tax law really means for workers, business owners, students, investors, creatives, and retirees.
Who Does the New Nigeria Tax Law Apply To?
The Nigeria Tax Act applies to:
- All individuals earning income in Nigeria
- Workers, traders, freelancers, content creators, influencers, and remote workers
- Nigerians earning income abroad if they are tax residents in Nigeria
If you earn income, chances are the law applies to you.
Will Bank Transfers or Deposits Be Taxed?
No.
POS transactions, bank transfers, deposits, and withdrawals are not taxable events.
Only income earned (salary, business profit, interest, gains) is subject to tax — not the movement of money.
Will Money in My Bank Account Be Taxed from 2026?
No.
Keeping money in your bank account is not taxable. Tax only applies to:
- Salary
- Business profit
- Investment income
- Interest earned
Do Students Without Jobs Pay Tax?
No.
If you have no taxable income, you don’t pay tax.
Will Tax Authorities Monitor Bank Accounts More Closely?
Yes, compliance tracking will improve.
However:
- Bank balances are not taxed
- Only profits and income are taxable
Are Loans Taxable? (FairMoney, PalmPay, etc.)
No.
Loans are not income, so they are not taxed.
The interest earned by lenders is what gets taxed.
One-Man Business: Personal or Company Income Tax?
- Business name (Enterprise): You pay Personal Income Tax (PIT)
- Limited Liability Company (Ltd): You pay Company Income Tax (CIT)
Are Profits from Selling Shares Taxable?
Not always.
You won’t pay tax if:
- Total value of shares sold is ₦150 million or less, and
- Total gains are ₦10 million or less
Anything above this threshold becomes taxable.
Are Pensions and Military Salaries Taxable?
- Pensions: Not taxable
- Military salaries: Fully tax-exempt
- Disability pensions for injured soldiers: Completely tax-free
Do Creatives Still Enjoy Foreign Income Tax Exemptions?
No.
From 2026:
- Authors, musicians, athletes, influencers, and creatives
- Must pay Nigerian tax on income earned both locally and abroad
Are Crypto Gains Taxable in Nigeria?
Yes.
Profits from cryptocurrency trading are now taxable under the new law.
Who Is Completely Exempt from Personal Income Tax?
- Individuals earning the national minimum wage or less
- Individuals earning below ₦800,000 per year
New Progressive Tax Bands (Effective 2026)
| Income Range | Tax Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2.2 million | 15% |
| Next ₦9 million | 18% |
| Next ₦13 million | 21% |
| Next ₦25 million | 23% |
| Above ₦50 million | 25% |
Will Severance or Exit Packages Be Taxed?
- Severance pay of ₦50 million or less → Tax-free
- Any amount above ₦50 million → Taxed using progressive tax rates
Are Foreign Dividends, Rent, and Interest Taxable?
No — if properly repatriated.
Dividends, rent, interest, and royalties earned abroad are tax-exempt when transferred to Nigeria through approved banking channels.
Will Agricultural Companies Pay Tax?
No, not immediately.
Agricultural companies involved in:
- Crop production
- Livestock
- Forestry
- Dairy
- Cocoa processing
Will enjoy a five-year tax holiday from the start of operations.
Are Government Bonds Taxable?
No.
All Federal and State Government bonds remain tax-exempt.
What Is Rent Relief Under the New Tax Law?
From 2026:
- You can claim 20% rent relief
- Capped at ₦500,000 per year
- Actual rent must be declared and verified
Example: I Earn ₦6 Million Yearly — Am I Better Off?
Yes.
- Old tax payable: ₦896,000
- New tax payable: ₦780,000
- Savings: ₦116,000
That means higher take-home pay.
Do Small Companies Below ₦50 Million Turnover Pay Tax?
Companies below the threshold may qualify for tax exemptions or reduced obligations, depending on size and structure.
Remote Workers: Will I Pay Tax?
Yes.
If you work remotely from Nigeria for a foreign organisation, you’ll pay tax if your income is not taxed abroad under any treaty or diplomatic arrangement.
Will Foreigners Working in Nigeria Be Taxed?
Not always.
Foreigners may be exempt if:
- Their employer is a startup or operates in tech or creative industries, and
- Their income is already taxed in their country of residence
Is TIN Mandatory for Bank Accounts from 2026?
- Existing accounts: You won’t lose access without a TIN
- New bank accounts: A TIN may be required
Banks will gradually request TINs for compliance.
Final Thoughts
The Nigeria Tax Act 2025 marks a major shift toward:
- Fairer taxation
- Higher take-home pay for low and middle earners
- Clearer rules for investments, crypto, and foreign income
Understanding these changes early will help you plan better, earn smarter, and stay compliant before 2026 arrives.