Comprehensive Guide

Nigeria's Tax Reform 2025: Everything You Need to Know

The biggest change to Nigeria's tax system in over a decade — explained in plain English.

Why Did Nigeria Reform Its Tax System?

Nigeria's tax system hadn't been meaningfully updated since 2011. The Personal Income Tax Act (PITA) was outdated: tax bands hadn't kept pace with inflation, and the system was too complex for most people to understand without an accountant.

Tax collection was fragmented across multiple agencies, with overlapping jurisdictions and inconsistent enforcement. The result? Low compliance, low revenue, and a system that hit lower earners harder than it should.

To fix this, the Presidential Committee on Fiscal Policy and Tax Reform, chaired by Taiwo Oyedele, was tasked with modernising the entire system. The committee's work led to four new laws, all signed by President Tinubu on June 26, 2025. The reforms take effect January 1, 2026.

The Four Laws That Changed Everything

1

Nigeria Tax Act (NTA)

Replaces the Personal Income Tax Act (PITA), Companies Income Tax Act (CITA), Capital Gains Tax Act, and Stamp Duties Act. One unified tax law covering individuals and businesses.

2

Nigeria Tax Administration Act (NTAA)

Modernises how taxes are collected, filed, and enforced. Introduces mandatory TIN, e-invoicing, and standardised filing deadlines.

3

Nigeria Revenue Service Act

Dissolves the Federal Inland Revenue Service (FIRS) and creates the Nigeria Revenue Service (NRS) as the single federal tax authority.

4

Joint Revenue Board Act

Coordinates tax collection between federal and state governments to reduce double taxation and improve efficiency.

What Changed for You: Personal Income Tax

New Tax Bands

0%
15%
18%
21%
23%
25%
₦0-800k₦800k-3M₦3M-12M₦12M-25M₦25M-50MAbove ₦50M

The first ₦800,000 of your income is now completely tax-free. Under the old PITA, this threshold was effectively ₦200,000 (via the Consolidated Relief Allowance). Each band only applies to income within that range, not your entire income.

* The old ₦200,000 figure refers to the minimum floor of the Consolidated Relief Allowance (CRA) under PITA. The CRA was calculated as the higher of ₦200,000 or 1% of gross income, plus 20% of gross income.

Old vs New: Side by Side

WhatOld (PITA)New (NTA)
Tax-free amount₦200,000 minimum*₦800,000 flat
Lowest rate7%15%
Highest rate24%25%
Number of bands66
Relief systemCRA (up to ~21% of income)Rent relief (20% of rent, max ₦500,000)
GratuityTax-freeNow taxable
Loss-of-office exemption₦10 million₦50 million
Capital gains taxFlat 10%Progressive (matches PIT rates)
Minimum wage earnersExemptStill exempt

* The old ₦200,000 figure refers to the minimum floor of the Consolidated Relief Allowance (CRA) under PITA. The CRA was calculated as the higher of ₦200,000 or 1% of gross income, plus 20% of gross income.

What This Means in Practice

For most low-to-middle income earners, the new system means you pay LESS tax. The ₦800,000 tax-free band is much more generous than the old CRA minimum. However, high earners lose the CRA deduction (which could shelter up to 21% of income) and face a higher top rate of 25%. The net effect depends on your specific income level. Use our calculator to see your exact impact.

Calculate Your Tax →

What Changed for Businesses

Small Company Exemption

If your company earns ₦50 million or less per year (gross turnover) and has fixed assets under ₦250 million, you qualify as a “small company” under the NTA. Small companies pay 0% company income tax, 0% capital gains tax, and are exempt from the 4% development levy.

Important: Professional service firms (lawyers, accountants, doctors, consultants) are explicitly excluded, even if they meet the turnover threshold.

Small Business VAT Exemption

Separately, the Tax Administration Act (NTAA) exempts “small businesses” (those with turnover of ₦100 million or less) from VAT registration. Note: this is a different threshold from the ₦50 million “small company” definition for income tax.

This means a business earning ₦70 million is exempt from both income tax (as a small company under NTA) AND VAT (as a small business under NTAA). A business earning ₦80 million is exempt from VAT but NOT from income tax.

Other Business Changes

  • •Development levy: 4% on assessable profits (replaces various earmarked taxes). Small companies exempt.
  • •Minimum effective tax rate: 15% for large companies and multinationals with turnover ≥ ₦20 billion
  • •Capital allowances simplified: uniform rates of 10%, 20%, or 25% depending on asset type
  • •Controlled Foreign Company rules: Nigerian parent companies now taxed on undistributed foreign subsidiary profits
  • •All other companies: 30% CIT rate (unchanged)

From FIRS to NRS: A New Tax Authority

The Federal Inland Revenue Service (FIRS) has been dissolved and replaced by the Nigeria Revenue Service (NRS) as of June 26, 2025. The NRS now also administers petroleum royalties (previously handled by NUPRC).

On 30 April 2026, the NRS retired the FIRS-era TaxProMax portal and launched Rev360 at selfservice.nrs.gov.ng — the implementation layer of what the NRS calls Tax Administration 3.0. TaxProMax accounts are being migrated automatically in phases. See our TaxProMax to Rev360 migration guide for what to do.

Tax Identification Number (TIN) is now mandatory for:

  • •Filing returns
  • •Official correspondence
  • •Government contracts
  • •Financial services
  • •Filing deadline: within 90 days after the end of the fiscal year (January-December)
  • •E-invoicing: real-time validation now required for VAT
  • •PAYE remittance: must be remitted by the 10th of the following month

Reform Timeline

2023

Presidential Committee on Fiscal Policy and Tax Reform established

Late 2024

Four tax reform bills introduced to the National Assembly

June 26, 2025

President Tinubu signs all four bills into law

January 1, 2026

New tax rates and provisions take effect

January 2028

Free Trade Zone export exemption sunset (subject to presidential extension)

PITA vs NTA: What's the Difference?

The Personal Income Tax Act (PITA) governed individual taxation since 2011. The Nigeria Tax Act (NTA) replaces it and goes further by also consolidating company income tax, capital gains tax, and stamp duties into a single law.

PITA (Old)

  • •Separate laws for income tax, company tax, CGT
  • •6 bands: 7% to 24%
  • •Consolidated Relief Allowance (CRA)
  • •Flat 10% capital gains tax
  • •Gratuity exempt from tax
  • •Multiple tax authorities and overlapping jurisdictions

NTA (New)

  • •One unified tax law
  • •6 bands: 0% to 25%
  • •₦800,000 tax-free band + rent relief
  • •Progressive capital gains tax
  • •Gratuity now taxable
  • •Single authority (NRS) with clearer jurisdiction

What Should You Do Now?

  • 1

    Get your TIN

    It's now mandatory for almost everything. Register at the NRS portal if you don't have one.

  • 2

    Know your tax band

    Use our free calculator to see exactly what you owe under the new law.

  • 3

    Understand your filing obligation

    If you earn above ₦800,000/year, you should file a return even if your employer deducts PAYE.

  • 4

    If you run a business

    Check if you qualify as a small company (≤₦50M turnover). If so, you may owe ₦0 in company income tax.

  • 5

    Consult a professional

    For complex situations (foreign income, investments, capital gains), consult a tax advisor. NoTaxMe provides education, not professional advice.

Calculate Your Tax →Read the Filing Guide →

This guide is for educational purposes only and does not constitute professional tax advice. While we strive for accuracy based on the Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025, Nigeria Revenue Service Act 2025, and Joint Revenue Board Act 2025, tax law is complex and subject to interpretation. For official guidance, consult the Nigeria Revenue Service (NRS) or a qualified tax professional.

Sources: Nigeria Tax Act 2025 (Fourth Schedule, Section 58); Nigeria Tax Administration Act 2025; Nigeria Revenue Service (Establishment) Act 2025; EY Tax Alert (June 2025); PwC Nigeria Tax Summaries; KPMG Nigeria GMS Flash Alert.