All 25 Frequently Asked Questions and Answers on Nigerian Tax Law Starting January 2026
- As 2025 draws to a close, Nigerians are bracing for a tax revolution set to take effect on January 1, 2026.
- The Tax Reform Act, signed into law by President Bola Tinubu in June 2025, aims to modernise the nation’s tax system.
- Despite months of awareness campaigns, misconceptions abound about the changes the new law brings
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms has sought to calm growing public anxiety over Nigeria’s sweeping tax reforms scheduled to take effect from January 1, 2026.
He insists the changes are not aimed at imposing higher tax rates or arbitrary revenue targets on citizens.
Source: Twitter
Speaking at the 2025 Nigeria Media Merit Award (NMMA) ceremony in Lagos last weekend, Oyedele said the reform agenda goes beyond taxation rates and government revenue, describing it instead as an effort to rebuild trust between citizens and the state.
Despite these efforts, many Nigerians remain concerned about the new law and continue to raise several questions.
A breakdown of some of these questions, along with answers, has been provided.
Who does the Nigerian Tax Law apply to?
No. It applies to all individuals earning income in Nigeria including workers traders content creators influencers and remote workers as well as Nigerians earning income abroad if they are tax residents in Nigeria.
Will transfers and deposits into bank accounts be taxed?
No. Bank transfers POS transactions deposits and withdrawals are not taxable events. Only income earned is taxed.
Will money kept in a bank account be taxed from 2026?
No. Simply holding money in a bank account is not taxable. Only income such as salary business profits or interest is taxed.
Do students without jobs pay tax?
No. Students or individuals with no taxable income do not pay tax.
Will tax authorities monitor bank accounts more closely?
Yes. Authorities may find it easier to track compliance but bank balances themselves will not be taxed. Only income and profits are taxed.
Are loans from lenders taxable?
No. Loans are not considered income and are therefore not taxable. However interest earned by the lender is taxable.
Do one man businesses pay personal or company income tax?
Yes. If registered as a business name or enterprise Personal Income Tax applies. If registered as a limited liability company Company Income Tax applies.
Are profits from selling shares taxable?
No. Provided the value of shares sold does not exceed N150 million and the gain is not above N10 million. Gains above these thresholds are taxable.
Are pensions taxable?
No. Approved pension and retirement benefits are tax-exempt.
Are military salaries taxable?
No. Salaries of military officers are exempt from tax.
Do creatives still enjoy tax exemptions on foreign income?
No. Authors musicians sports professionals and other creatives must now pay Nigerian tax on income earned both locally and abroad.
Source: Getty Images
Are crypto gains taxable?
Yes. Profits from cryptocurrencies NFTs and other digital assets are taxable.
Who is exempt from Personal Income Tax?
Yes. Individuals earning the national minimum wage or less and those earning below N800000 annually are exempt.
What are the new progressive tax bands from 2026?
Yes. First N800000 taxed at 0 percent. Next N2.2 million at 15 percent. Next N9 million at 18 percent. Next N13 million at 21 percent. Next N25 million at 23 percent. Income above N50 million at 25 percent.
Will severance packages be taxed?
No. Severance pay of N50 million or less is tax free. Any amount above N50 million will be taxed using the progressive bands.
Will dividends or rent earned abroad be taxed?
No. Dividends interest rent and royalties earned abroad are exempt if repatriated through approved Nigerian banking channels.
Are disability pensions for injured soldiers taxable?
No. Disability pensions for members of the armed forces are fully tax exempt.
Will agricultural companies be taxed?
No. Agricultural companies engaged in crop production livestock forestry dairy or cocoa processing will enjoy a five year tax holiday from commencement of operations.
Is income from federal or state government bonds taxable?
No. All federal and state government bonds are tax exempt.
What is rent relief under the new law?
Yes. From 2026 individuals can claim rent relief of 20 percent of annual rent capped at N500000 subject to declaration and verification.
Will someone earning N6 million yearly be better off?
Yes. Tax payable drops from N896000 to N780000 resulting in savings of N116000 and higher take home pay.
Will companies with turnover below N50 million pay tax?
No. Small companies with annual turnover below N50 million are exempt from tax.
Will remote workers in Nigeria for international organisations pay tax?
Yes. If their income is exempt in the organisation home country under a treaty or diplomatic arrangement.
Will foreigners earning salaries in Nigeria be taxed?
No. If the employer is a start up or operates in the tech or creative industries and the income is already taxed in the foreigner country of residence.
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Will lack of a TIN affect access to bank accounts?
No. Existing bank accounts will not be blocked for lack of a Tax Identification Number. However opening a new bank account without a TIN may not be allowed.
Platforms for tax payments
Earlier, Legit.ng reported that paying taxes in Nigeria has been made simpler by the Federal Government.
Citizens can use four platforms to pay their taxes conveniently, with the process now digital and accessible.
Source: Legit.ng
