By Editorial Staff 
Nigeria’s new tax and fiscal reforms came into effect on Thursday, January 1, 2026, amid widespread public anger, anxiety, and misinformation surrounding the new tax laws.
Recall that President Bola Ahmed Tinubu, on Thursday, June 26, 2025, signed the new tax bill into law, and it was gazetted.
There are debates over discrepancies between the version passed by the National Assembly and the gazetted version after a member of the House of Representatives, Abdulsamman Dasuki, raised concerns over alleged alterations to the gazetted version of the tax law, prompting the leadership of the National Assembly to call for the laws to be re-gazetted to address the concerns.
Leading voices who advised the government to put its implementation on hold to allow for further review included former Senate Leader Ali Ndume; former Minister of Education Oby Ezekwesili; and human rights lawyer Femi Falana (SAN), among others. However, the president stated there was no going back.
According to an ace broadcaster, Nifemi Oguntoye, there has been a lot of confusion and misinformation about the Nigeria Tax Act 2025. The misinformation began from when the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, was constituted and submitted its reports, through to the passage of the bill by the National Assembly, with a majority expressing fears that they would be mandated to pay more tax.
Here is a list of misinformation being peddled around and the clarity on what the new tax law specifically says, according to Nifemi:
- Will someone who earns ₦800,000 pay tax?
There are debates over whether someone who earns under ₦800,000 will pay tax or not. You will not pay tax if your earnings are below ₦800,000 per year. However, you will pay tax if you earn ₦800,000 per month. This totals more than ₦9,000,000 per annum, meaning you will pay tax on this kind of earnings.
Under Section 58 and the Fourth Schedule, which comes under Individual Income Tax (IIT), the first ₦800,000 of chargeable income is taxed at zero percent. This threshold is calculated per year, after allowable deductions, not as a monthly exemption.
2. Will minimum wage earners (₦70,000) pay tax?
No. Section 58 of the Act expressly states that “after the relief allowance and exemptions have been granted in accordance with Section 30 (1) of this Act, the taxable income ascertained shall be taxed at the following rates: first ₦800,000 at 0%; next ₦2,200,000 at 15%; next ₦9,000,000 at 18%; next ₦13,000,000 at 21%; next ₦25,000,000 at 23%; and above ₦50,000,000 at 25%.”
This means that Section 58 excludes individuals earning the minimum wage in line with the Minimum Wage Act. This means workers earning ₦70,000 monthly, or ₦840,000 annually, are exempt from personal income tax.
3. Does this mean that personal income tax is now a flat 15 percent?
No. The law retains a graduated tax system. According to the Fourth Schedule under Section 58, the first ₦800,000 is taxed at zero percent, followed by ₦2.2 million taxed at 15 percent, as outlined above.
4. Are deductions still allowed before tax is calculated?
Yes. Section 30 allows deductions such as pension contributions, NHF, NHIS, life insurance premiums, and interest on owner-occupied housing loans. Tax is applied to chargeable income, not gross earnings.
5. Will a worker earning ₦70,000 pay ₦10,500 monthly in tax?
No. Minimum wage earners are exempt under Section 58 of the Personal Income Tax Act 2023, and the ₦800,000 annual tax-free band means low-income earners pay almost nothing.
6. Will workers pay tax monthly or annually?
Tax is paid monthly. The PAYE system remains in place under the employment income provisions of the Act. Employers deduct and remit tax monthly, meaning workers are not required to make lump-sum payments at the end of the year.
7. What should workers expect to see on their payslips from January?
Payslips should typically show gross income, statutory deductions, PAYE where applicable, and net pay. Minimum wage earners should see zero PAYE deductions.
8. Will self-employed Nigerians pay tax?
Sections 29 to 31 provide that self-employed Nigerians must file annual tax returns and are taxed on profits, not turnover. Presumptive tax applies only where proper records are not kept.
9. Are allowances and benefits taxed?
Some are, some are not. Section 14 on benefits-in-kind provides that employer-provided housing (subject to limits), vehicles, and certain assets are taxable. Items such as work tools, uniforms, staff meals, and relocation expenses are not taxable.
10. That the bulk of the tax will be transferred to the masses
There are fears that the implementation of the new tax laws will be felt by the masses, just as with the removal of fuel subsidy. The fear among Nigerians is that many businesses are going to take advantage of the 7.5% VAT to increase their revenue without remitting it to the government. This is true, but as a citizen, you have a role to play in supporting the government in exposing businesses that exploit Nigerians.
To reduce this form of exploitation, the Office of the Tax Ombudsman will commence full operations on January 1, 2026. According to reports, if you have issues with tax, this office will address your grievances and strengthen trust between taxpayers and revenue authorities nationwide. If any company charges you an illegal 7.5% VAT, make sure you have your receipts and post it on X, tagging the NRS in the post to verify if the company is registered for VAT and whether what they are charging for is zero-rated or not.
The Nigeria Tax Act 2025 protects minimum wage earners, introduces a clear ₦800,000 tax-free income band, retains the PAYE system, and places the tax burden more squarely on higher incomes rather than survival wages.