Everything You Need To Know About Nigeria’s New Tax Laws in 2026

Your money hasn’t changed, but the rules around it have.

The way money is taxed in Nigeria is changing, and many people have begun noticing the shift through online conversations and news reports. Freelancers are asking questions about foreign income, local employees are trying to understand how their take-home pay may be affected, and business owners are reassessing their costs and pricing. These concerns all trace back to the 2025 Tax Reform Acts, signed into law in June 2025 and effective from January 1, 2026.

The reform was created to achieve set goals:

• Make taxation simpler. You won’t need expert knowledge of tax law to understand your taxes.
• Make taxation fairer so that the right people pay the right amount.
• Widen the tax base so that more people pay taxes, reducing the burden on individuals.
• Go fully digital to make tax compliance less about paper and queues and more about structure and convenience.

What changed?

The tax reform isn’t a single law. It’s a group of four new acts, each with a specific goal but working together:

• Nigeria Tax Act (NTA): Rather than having different tax laws scattered across various laws, the government consolidated them into a single framework. Some of the taxes include the Companies Income Tax Act (CITA), Personal Income Tax Act (PITA), Capital Gains Tax Act (CGTA), Value Added Tax Act, and the Stamp Duties Act, etc. The goal is to make taxes easier to understand and update the system for today’s digital economy.
• The Nigeria Tax Administration Act, 2025 (NTAA): This law focuses on how taxes are handled. It covers how you file your taxes, make payments, and manage everything online, making the process more straightforward and digital-friendly.
• The Joint Revenue Board Act, 2025 (JRBA): This means that federal, state, and local tax bodies will be working as one, so you will not be taxed twice for the same thing.
• The Nigeria Revenue Service Act, 2025 (NRSA): This replaces the old FIRS law from 2007. It sets up the Nigeria Revenue Service (NRS) as the main office in charge of collecting taxes and certain government fees, like oil royalties.

Impact on Individuals/Salary Earners

Personal Income Tax

The law changes how personal income tax works. Tax rates now go from 0% to 25%, and people earning ₦800,000 or less a year don’t pay any tax. It also lets employees deduct part of their rent (up to ₦500,000) to make housing more affordable. Here’s a tip on how to calculate your take-home amount depending on your salary range.  For a practical example of how this works, you can check here.

Value Added Tax remains at 7.5%, but its application and recovery rules have been refined. Essentials like basic food, education, healthcare, and transport are now exempt, reducing the tax burden on daily expenses. Businesses and freelancers can claim VAT credits on a wider range of work-related expenses, preventing double taxation and improving cash flow. Digital invoicing is now mandatory, increasing transparency, simplifying audits, and reducing disputes with tax authorities.

Freelancers must file taxes through self-assessment. This means declaring income, calculating the tax due, and filing returns directly, rather than relying on an employer to do so.

To manage this effectively, accurate record-keeping is essential. Expenses such as home internet, phone bills, co-working space, and work-related subscriptions are allowable deductions. Tracking expenses through Squareme makes it easy to separate personal and business payments and maintain accurate records.

Impact On Small and Medium Enterprises

Company Income Tax

The Act also changes how companies are taxed. Small businesses that make ₦50 million or less in a year will not pay company income tax at all. Other businesses will still pay 30% tax, plus a 4% development levy. This new levy replaces several older taxes, making the system simpler.

There is also a new rule for very large companies. Big multinational companies and Nigerian companies earning over ₦50 billion must pay at least 15% tax overall. If any part of the business pays less tax in another country, the Nigerian parent company will pay the difference.

To stop companies from hiding profits in low-tax countries, Nigeria can now tax certain income earned by foreign subsidiaries, even if that money has not been brought back into the country.

Capital gains tax has also been expanded. It now applies to digital assets like cryptocurrencies and other virtual property. However, some sales are still exempt, such as selling your main home, certain personal items, and some share sales. In particular, small share sales under ₦150 million are not taxed, as long as the profit is ₦10 million or less.

Digital Payments and Virtual Cards

Digital payments and online transactions are now fully within Nigeria’s tax system. This means individuals and businesses must keep proper records of subscriptions, online payments, and cross-border transactions to stay compliant.

Using virtual cards and digital payment platforms like Squareme doesn’t change the tax you pay, but it makes tracking easier by keeping all transactions in one place. This helps with tax calculations, deductions, and audit preparation.

For example, freelancers and content creators paying for software or online services can export their Squareme transaction history and clearly separate business expenses from personal ones. Digital service withholding tax of 10% now applies to many cross-border and online payments, so accurate records are essential.

In simple terms, reviewing digital transactions regularly and keeping organised electronic records helps reduce errors and makes tax reporting much easier for individuals and SMEs.

How to Stay Compliant

Staying on the right side of the new tax rules does not have to be overwhelming. With a few clear steps, everyone can meet their obligations confidently and avoid penalties.

• Get Your Tax Identification Number

A Tax Identification Number, or TIN, is now essential for filing returns and making many official payments. Registration is straightforward. Visit taxportal.firs.gov.ng create an account, upload your NIN and a passport photograph, and submit your details. Most applicants receive their TIN within 48 hours. If you earn income in Nigeria, this is your first compliance step.

• Keep Accurate Records

Good records are the foundation of stress-free filing. Keep bank statements, invoices, receipts, contracts, and proof of payment. Digital records are easier to manage and retrieve when needed.

You may have seen posts online claiming that adding a narration when sending money will help tax collectors “take less” from you. No, Emeka. That’s a myth. The narration isn’t for them, it’s for you. It helps you remember what each transaction was for when filing your taxes, so you can track income, spot deductible expenses, and stay organized.

Consistently labelling transactions, maintaining organized records, and reviewing them regularly ensures that individuals stay compliant, claim all eligible deductions, and manage their finances with confidence.

• Understand Your Filing Obligations

Employees under PAYE usually have taxes deducted monthly by their employers, but it is important to review your payslip to confirm accuracy. Self-employed individuals and freelancers must file annual returns by March 31 each year, declaring all sources of income. Missing deadlines can attract penalties and interest.

• Pay Attention to Withholding Tax

Withholding tax applies to certain services and cross-border payments. Always confirm whether tax has already been deducted at source and keep supporting documents as evidence. This helps prevent double taxation.

• Know When to Get Help

If you earn income from three or more sources, deal in multiple currencies, or run a growing business, it may be wise to consult a licensed tax professional. Expert guidance can save time, money, and costly mistakes.

How To Plan Your Tax Payment

Effective tax planning is about building habits that make compliance simple and stress-free. Start by setting aside a portion of your income regularly. For freelancers or small business owners, putting aside around 15% of earnings each month in a separate wallet ensures you’re ready when taxes are due. It is better to have too much than not enough.

Next, maximise deductions. Expenses that directly support your work can lower your taxable income. These include internet and phone bills, software subscriptions, co-working space fees, and professional development courses. Keep receipts and records for all these payments.

Organisation matters too. Tag transactions in Squareme as “business” or “personal” immediately. This small step prevents confusion later and makes exporting records for tax filing straightforward.

Regular reviews are essential. Check your income and expenses quarterly, not just at filing season. This helps catch errors early, estimate tax obligations, and adjust savings or spending as needed.

By consistently tracking income, categorising expenses, and setting aside funds, you turn tax season from a stressful scramble into a routine part of managing your finances, giving you confidence and control over your money.

Next Steps

The tax reforms affect anyone who earns, spends, or runs a business in Nigeria. Staying informed and organised is essential for managing obligations and protecting your finances.

Open a Squareme account today, request your virtual dollar card and easily track every transaction automatically. By keeping your income and expenses organised in one place, you can separate personal and business spending, monitor deductions, and approach tax season with confidence instead of stress.

Legal Disclaimer

This content is for informational purposes only and does not constitute tax advice. Consult FIRS or a licensed tax professional for your specific situation.