Nigeria Tax Act 2025: Key Changes
The Nigeria Tax Act 2025, effective January 1, 2026, is the biggest tax reform in decades. Here's what changed and how it affects you.
Personal Income Tax (PIT) Changes
New 0% Tax Bracket
Before: Everyone paid tax from the first Naira
After: First ₦800,000 is tax-free
This means minimum wage earners (₦70,000/month) pay zero income tax.
New Tax Brackets
| Taxable Income | Old Rate | New Rate |
|---|---|---|
| First ₦300k | 7% | 0% (up to ₦800k) |
| ₦300k - ₦600k | 11% | 15% (₦800k-₦2.8M) |
| ₦600k - ₦1.1M | 15% | 18% (₦2.8M-₦5.2M) |
| ₦1.1M - ₦1.6M | 19% | 21% (₦5.2M-₦10.2M) |
| ₦1.6M - ₦3.2M | 21% | 23% (₦10.2M-₦40.2M) |
| Above ₦3.2M | 24% | 25% (above ₦40.2M) |
Simplified CRA
The Consolidated Relief Allowance calculation is now simpler:
- Higher of ₦200,000 or 1% of gross
- PLUS 20% of gross income
Corporate Tax Changes
Small Company Exemption
Companies with turnover under ₦50 million now pay 0% CIT.
This is huge for small businesses and startups!
Medium Company Rate
Companies with turnover ₦50M - ₦200M pay 20% (down from 30%).
Large Companies
Turnover above ₦200M still pay 30%.
VAT Changes
- Rate remains at 7.5%
- Threshold for registration: ₦25 million turnover
- More items zero-rated (food, education, healthcare)
- Improved input VAT credit system
Penalties
New ₦5 Million Penalty
Awarding contracts to unregistered persons (without valid TIN) now carries a ₦5,000,000 penalty.
Use our Vendor Compliance Tool to verify contractors.
Who Benefits Most?
- Minimum wage earners - 0% tax (was ~2%)
- Middle income earners - Lower effective rates
- Small businesses - 0% CIT exemption
- Medium businesses - 20% instead of 30%
Who Pays More?
Very high earners (above ₦40M) see a slight increase from 24% to 25% marginal rate.
When Does It Take Effect?
January 1, 2026 - The law was passed in 2025, but applies from the 2026 tax year.
Calculate Your New Tax
Use our updated calculators to see how the 2025 reforms affect you:
- PIT Calculator - See your 2026 tax
- Compare Tool - Compare 2024 vs 2026 rates
- CIT Calculator - Business tax under new rules