New Tax Law: Who Pays Less and Who Pays More in Nigeria From 2026

Nigeria’s new tax law took effect on January 1, 2026, and it has changed how much different groups of people and companies will pay.

The idea behind the reform is simple: people who earn less should pay less (or nothing), while people who earn more should contribute more.

Here is a clear breakdown of who falls into the lowest and highest tax brackets under the new system.

Who Will Pay the Lowest Taxes

Under the new law, low-income workers get the biggest relief.

Salary earners who make ₦800,000 or less in a year are expected to be fully exempt from personal income tax. This means they can keep their full earnings without PAYE deductions, provided they meet the legal conditions.

The reform also points out that many middle-income earners, especially those earning between ₦1 million and ₦10 million yearly, may end up paying some of the lowest effective tax rates, depending on their allowable deductions.

Tax experts advise that deductions and claims must be properly documented to avoid problems during tax checks or disputes.

Who Will Pay the Highest Taxes

The new structure is more “progressive”, meaning the tax rate increases as income increases.

Individuals earning ₦50 million and above per year fall into a higher band and may be taxed at a top rate of up to 25%. This is slightly higher than the previous top rate of 24%.

For companies, one major change is Capital Gains Tax (CGT). Under the new law, CGT for companies reportedly increased from 10% to 30%, aligning it with the corporate income tax level. 

The goal is to close loopholes that allow businesses to structure transactions to pay less tax through asset sales.

Why Government Says It Made These Changes

Officials say the reforms are meant to:

Improve fairness by making higher earners and large companies contribute more.

Protect low-income households by removing tax burden from the lowest earners.

Reduce loopholes and tax avoidance strategies.

Modernise how taxes are collected and reported.

What Else the Reform Covers

Beyond personal taxes, the broader reform package also introduced changes that affect businesses and compliance:

Small businesses may get relief if they fall under certain turnover and asset thresholds.

VAT stays at 7.5%, but more items may be treated as zero-rated or protected, such as some essentials.

Tax compliance is expected to become more digital, with stronger reporting requirements and clearer rules on documentation.