New Tax Law: List of Nigerians Who Will Be Paying Lowest and Highest Taxes
- Nigeria’s new tax law, effective January 1, reshaped who pays the least and who pays the most
- High-income earners and companies faced steeper rates, while low-income workers gained full exemptions
- Middle-income earners were identified as paying the lowest tax, provided deductions were properly documented
As the new tax law came into effect on January 1, changes in Nigeria’s tax structure reshaped who pays the least and who shoulders the highest burden.
Officials reported that a more progressive tax structure now applied, with higher marginal rates for top earners.
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Individuals earning ₦50 million and above annually were said to fall into a new band, taxed at up to 25%. This marked an increase from the previous top rate of 24%.
In addition, the Capital Gains Tax (CGT) rate for companies rose sharply from 10% to 30%. Authorities explained that this adjustment aligned CGT with the standard corporate income tax rate.
The move was described as a way to eliminate arbitrage between capital and trading income, while discouraging artificial asset disposal strategies that had been used to minimise tax obligations.
Lowest tax payers benefit from exemptions
Salary earners under ₦800,000 per year were reported to be exempt from tax under the new law. This group would keep 100% of their income and gains, offering relief to low-income workers.
Meanwhile, middle-income earners with annual earnings between ₦1 million and ₦10 million were identified as paying the lowest tax rates. Tax experts advised that deductions should be properly documented to ensure compliance and avoid disputes.
Impact of the tax changes
The government stated that the new measures were designed to strengthen fairness in the system by ensuring that wealthier individuals and companies contributed more. At the same time, the exemption for low-income earners was seen as a way to protect vulnerable households.
The changes, which took effect on January 1, were expected to reshape Nigeria’s tax landscape by balancing revenue generation with social equity.
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What you need to know about Nigerian tax law?
According to Baker Tilly, Nigeria’s 2025 Tax Reform Acts represented one of the most significant overhauls of the country’s fiscal framework in decades, replacing outdated statutes with four new Acts that streamlined tax administration and modernised compliance.
Signed into law on June 26, 2025, the reforms introduced the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board (Establishment) Act, all designed to unify personal income tax, corporate taxation, VAT, capital gains and fiscal governance under a single framework.
The measures provided relief for small businesses by exempting companies with turnover below ₦50 million and fixed assets under ₦250 million from corporate income tax, capital gains tax and the new 4% development levy, while simultaneously increasing obligations for larger corporations and high-income earners.
Capital Gains Tax for companies rose from 10% to 30%, aligning with the corporate tax rate and closing loopholes that had allowed arbitrage between capital and trading income. Personal income tax bands became more progressive, exempting individuals earning ₦800,000 or less annually while taxing those with incomes above ₦50 million at a new top rate of 25%.
Large corporations with turnover exceeding ₦50 billion or multinational groups earning €750 million or more were required to meet a minimum effective tax rate of 15%, with top-up taxes applied if they fell short. VAT remained at 7.5% but the scope of zero-rated goods was expanded to include food, books and medical supplies, and input VAT on services and capital assets became fully claimable.
The reforms also introduced mandatory e-invoicing and real-time VAT reporting, alongside digitisation of compliance processes across all taxes, while residency rules were clarified to ensure Nigerian residents were taxed on worldwide income.
Four categories of Nigerians exempted from paying tax
Legit.ng earlier reported that Nigeria’s Fiscal Reforms announced that from January 1, 2026, new tax laws would come into effect, offering relief and exemptions to low-income earners, average taxpayers, and small businesses.
Officials said the changes were designed to ease the financial burden on citizens and encourage compliance with tax regulations. Here is the list here.
Source: Legit.ng
