Nigeria – Changes to Personal Income Tax – September 2025
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Overview of the Tax Reform Acts
On June 26, 2025, the President of Nigeria signed four new tax reform bills into law, which are considered the most significant overhaul of the country’s tax structure since 1999. The reforms are intended to streamline tax administration, boost tax compliance, and align with global standards. The new laws also replace and consolidate over a dozen existing federal tax laws, including the Personal Income Tax Act (PITA), into a single statute.
The four landmark legislations are:
- Nigeria Tax Act 2025
- Nigeria Tax Administration Act 2025
- Nigeria Revenue Service Act 2025
- Joint Revenue Board Act 2025
Changes to Personal Income Tax (Effective January 1, 2026)
A new progressive tax structure for individual income taxes will be implemented starting January 1, 2026. The new progressive tax regime provides significant relief to low-income earners, while higher-income earners will be taxed at a higher rate. The new rates are lower for middle-income earners compared to the previous rates.
- A full tax exemption has been introduced for minimum wage earners with an annual income of less than or equal to N800,000.
- The Consolidated Relief Allowance (CRA) has been completely abolished.
- A new Rent Relief system has been introduced in its place, calculated as the lower of NGN500,000 or 20% of the annual rent paid by an individual. This replaces the previous CRA, which for many taxpayers may result in a lower relief value.
- The exemption threshold for compensation for loss of employment will increase from NGN10,000,000 to NGN50,000,000.
- Capital Gains Tax for individuals will now be taxed at the applicable progressive income tax rate based on the individual’s income brackets.
The new annual income tax rates are as follows:
| Annual Income Bracket (₦) | Tax rate (%) |
|---|---|
| 0-800,000 | 0 |
| 800,001-3,000,000 | 15 |
| 3,000,001-12,000,000 | 18 |
| 12,000,001-25,000,000 | 21 |
| 25,000,001-50,000,000 | 23 |
| Above 50,000,000 | 25 |
Corporate Tax Changes (Effective April 1, 2026)
- The minimum tax has been abolished.
- A global minimum tax rate of 15% for multinational firms has been introduced, aligning with the OECD’s Pillar II framework.
- The Capital Gains Tax for companies has been increased from 10% to 30%.
- A new Development Levy of 4% on assessable profits replaces multiple other levies, such as the Tertiary Education Tax and the Police Trust Fund levy.
- The exemption threshold for small businesses has been raised. Small companies are now defined as those with an annual turnover of N100 million or less and total fixed assets not exceeding N250 million, and are exempt from Companies Income Tax, Capital Gains Tax, and the new Development Levy.
Implementation Timeline
| Reform Area | Effective Date |
|---|---|
| Personal Income Tax | January 1, 2026 |
| Corporate Tax Changes | April 1, 2026 |
| New Revenue Service | July 1, 2026 |
| Digital Tax system | October 1, 2026 |
We recommend that all relevant parties become familiar with these new rates and the tax structure as the effective dates approach. If you require additional support, please contact your Mercans’ services delivery team.
Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.
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