-
📰 NEW TAX ACT 2026: What Nigerians Must Know — Questions & Answers on the New Law
By Coolnews.ng Editorial Board
Published: November 2025
Introduction: A New Dawn for Nigerian Taxation
With the New Nigeria Tax Act taking effect from January 1, 2026, Nigerians are bracing for a tax reform that promises fairness, modernization, and inclusion.
From civil servants to small traders, content creators to remote workers — everyone wants to know how the changes will affect them.
To help clear the air, Coolnews.ng brings you this comprehensive Q&A guide, written in plain language for individuals and small business owners.
💬 “The new tax law focuses on income — not bank transfers or deposits,” says a senior tax analyst at Coolnews Research Desk.
“It aims to protect low-income earners while broadening the tax base through digital income sources.”
THE NEW NIGERIA TAX ACT — QUESTIONS & ANSWERS
1️⃣ When will the law take effect?
Answer: The new Nigeria Tax Act comes into force on January 1, 2026.
2️⃣ Who will it apply to?
Answer: It applies to everyone earning income in Nigeria, including:
Workers and civil servants
Traders and business owners
Remote and online workers
Influencers and content creators
Nigerians abroad who are tax residents in Nigeria
3️⃣ Will bank transfers and deposits be taxed?
Answer: ❌ No.
Transfers, POS payments, or deposits are not taxable events. Only income earned will attract tax.
4️⃣ Will the money in my bank account be taxed?
Answer: ❌ No.
Money sitting idle in your account isn’t taxable — only income like salary, profits, or interest.
5️⃣ Will students pay tax?
Answer: No.
If you don’t earn income, you don’t pay tax.
6️⃣ Will FIRS monitor business accounts?
Answer: ✅ Yes, but only for compliance.
They can check whether you’ve paid your tax, but balances themselves won’t be taxed.
7️⃣ Are loans taxable?
Answer: ❌ No.
Loans are not income. But lenders like Fairmoney or Carbon will pay tax on interest they earn.
8️⃣ I run a one-man business — which tax applies?
Answer:
If registered as a Business Name, pay Personal Income Tax.
If registered as a Limited Liability Company, pay Company Income Tax.
9️⃣ Are profits from shares taxable?
Answer: No, unless you sell shares worth over ₦150m or gain more than ₦10m — above that, tax applies.
🔟 Are pensioners taxed?
Answer: ❌ No.
Approved pensions and retirement benefits are fully tax-exempt.
11️⃣ Are military salaries taxable?
Answer: No.
Military officers’ salaries are tax-free under the new law.
12️⃣ Do musicians and creatives pay tax on foreign income?
Answer: ✅ Yes.
Authors, artistes, sportsmen, and influencers must now pay tax on both local and international income.
13️⃣ Are crypto profits taxable?
Answer: ✅ Yes.
Profits from cryptocurrency, NFTs, and digital assets are now taxable.
14️⃣ Who is exempt from paying income tax?
Answer:
Individuals earning ₦800,000 or less per year, or those earning the national minimum wage, are fully exempt.
15️⃣ What are the new tax bands?
Income Range (₦) Tax Rate
First ₦800,000 0%
Next ₦2.2m 15%
Next ₦9m 18%
Next ₦13m 21%
Next ₦25m 23%
Above ₦50m 25%
16️⃣ Will severance pay be taxed?
Answer: No, if ₦50m or less.
Anything above ₦50m will be taxed using the progressive rates above.
17️⃣ Are dividends or rent from abroad taxable?
Answer: ❌ No.
They’re tax-free if brought in through approved bank channels.
18️⃣ Are disability pensions for soldiers taxable?
Answer: ❌ No.
Such pensions remain fully exempt.
19️⃣ Will agricultural companies pay tax?
Answer: No.
New agricultural businesses get a 5-year tax holiday from the start of operations.
20️⃣ Are government bonds taxable?
Answer: ❌ No.
All Federal and State Government bonds are tax-free.
21️⃣ What is Rent Relief under the new law?
Answer:
From 2026, individuals can claim 20% rent relief (up to ₦500,000) on annual rent.
Example: if your rent is ₦5m, 20% = ₦1m, but the relief is capped at ₦500k.
22️⃣ Example — How does this affect my take-home pay?
If you earn ₦6 million/year:
Under old law: Pay ₦896,000 tax
Under new law: Pay ₦780,000 tax
✅ You save ₦116,000 — higher take-home pay.
23️⃣ Are small companies taxed?
Answer: ❌ No.
Businesses with turnover below ₦50 million are exempt.
24️⃣ Are remote workers for foreign firms taxed?
Answer: ✅ Yes, if their income is not already taxed abroad under a treaty.
25️⃣ Are foreigners earning in Nigeria taxed?
Answer: ❌ No, if their employers are tech start-ups or creative firms and income is already taxed abroad.
The New Nigeria Tax Act 2026 is a bold attempt to simplify the system while embracing new realities — from crypto traders to influencers and remote workers.
“The focus is now on fairness and digital inclusion,” says Dr. Kayode Omolayo, a financial analyst and Coolnews contributor.
“It protects small earners and modernizes the system without penalizing honest citizens.”
Still, implementation and public awareness will be crucial. Clear communication from FIRS and transparent enforcement can turn this law from a burden into a breakthrough.
In essence, Nigeria’s tax future has arrived — and it starts with understanding.
Facebook Comments