2026 Nigeria’s Tax Reforms Simplified For You

Why Should You Care About The New Tax Reforms?

Let’s be honest—when most people hear about “tax reforms,” their eyes glaze over in confusion. But these upcoming changes will touch every Nigerian’s pocket, whether you’re a market trader, a salary earner, a student, or a business owner. The government has released detailed documents, but we’ve done the hard work of breaking down the 135-page documents into little pieces for easy understanding.

This isn’t about complicated economics—it’s about answering one simple question: “How will this tax reform affect MY money and MY life?”

Core Changes On The New Tax Reforms

1. VAT Adjustments: What Will Cost More?

Current rate: 7.5%
From 2026: Some goods and services will move to 10% VAT

What gets more expensive?

• Telecommunications services (airtime, data)

• Certain processed foods and beverages

• Professional services (legal, consulting)

• Hotel and restaurant services (above a certain price point)

What Stays The Same or Exempted?

• Basic food items (rice, beans, garri, yams)

• Baby products

• Educational materials and services

• Healthcare services and medicines

• Public transportation

To put this in perspective: If you buy ₦5,000 airtime today, you pay ₦5,375 (including 7.5% VAT). From 2026, similar purchases might cost ₦5,500 (with 10% VAT).

2. Personal Income Tax: Will My Salary Reduce?

The government is not significantly increasing taxes for low and middle-income earners. Instead, they’re:

• Simplifying the system – Making it easier to understand

• Closing loopholes – Ensuring high earners pay their fair share

• Introducing more brackets – Making it more progressive (those who earn more, pay slightly more)

If you earn minimum wage or slightly above: Your taxes will likely remain the same or see minimal change.

If you earn ₦500,000+ monthly, you may see a small increase in deductions, but with clear thresholds announced in advance.

3. How The New Tax Reforms Affect Entrepreneurs & Companies

Small Businesses (Under ₦25 million turnover):

• Good news: You may qualify for tax holidays or reduced rates if you register formally

• Requirement: You must register with FIRS and keep basic records

• Support: Free accounting tools will be provided by FIRS

Medium & Large Businesses:

• Company Income Tax remains around 30% for large companies

• New requirement: Better documentation and digital submission

• Incentives: Companies investing in infrastructure or job creation may get tax breaks

4. The New Tax Reforms VS Online Earners

This is NEW and affects anyone making money online:

Who it affects:

• Social media influencers with brand deals

• Freelancers on platforms like Upwork, Fiverr

• E-commerce sellers (Jumia, Konga, and Instagram sellers)

• App developers and digital service providers

How it works:

• Platforms may deduct 5-10% at source for earnings above ₦3 million annually

• You must declare your online income separately

• Exemption: Small-scale sellers making under ₦250,000 monthly won’t be heavily taxed

5. Sin Tax Reform on Alcohol, Tobacco, Sugar

Products considered harmful will cost more:

• Sugary drinks (soft drinks, some juices): +20% tax

• Cigarettes: +25% tax

• Alcohol: +15-20% tax

Rationale: To discourage unhealthy consumption while raising revenue for healthcare.

How The New Tax Reforms Affect Everyone In Nigeria

The Average Salary Earner:

• Your take-home pay might decrease slightly if you’re in higher income brackets

• New tax reliefs for health insurance, education expenses

• Mandatory: Ensure your employer has your correct NIN/BVN details

Market Traders & Small Business Owners:

• Registration is key: Get your TIN (Tax Identification Number)

• Threshold: If you make less than ₦3 million annually, you pay minimal taxes

• Benefit: Formal registration gives you access to government loans and contracts

For Young People & Students:

• Part-time jobs and side hustles now need documentation

• Exemption: If you earn below ₦100,000 monthly from side jobs, no need to worry

• Digital skills training will be tax-deductible if certified

For Retirees & Pensioners:

• Pension income remains largely tax-free

• Additional small business in retirement now needs registration if above the threshold

How The Tax Reforms Will Be Enforced

NIN or BVN Linking

The government is creating a unified system where:

• Your identity (NIN)

• Your bank accounts (BVN)

• Your tax records (TIN)

…are all connected. This means:

1. Easier tax filing – Automatic pre-filled forms

2. Reduced fraud – Harder to hide income

3. Better planning – The Government knows the actual revenue potential

Digital Tools You’ll Use For Your Taxes:

1. FIRS TaxPro-Max – A mobile app for easy filing

2. Auto-assessment – A system that suggests what you might owe

3. E-receipts – Every transaction is digitally recorded

Some Fears People Have About The New Tax Reforms

“Will I Pay Tax on My WhatsApp Business?”

• Yes, if you make significant profits (above ₦3 million annually)

• No, if it’s occasional sales to friends and family

• Solution: Keep simple records; use the FIRS small business exemption

“Can They Tax My Inheritance?”

• Only if it’s large properties or cash above ₦50 million

• Family homes and small inheritances are protected

• Proper documentation avoids problems

“What If I Can’t Afford an Accountant?”

• FIRS is creating free tax clinics in every LGA

• Community Tax Assistants will be trained

• Simple templates will be available online

How To Prepare For The New Tax Reforms

Before 2026:

1. Get your documents ready:

   • NIN (mandatory)

   • TIN (apply online via FIRS.gov.ng)

   • Business registration (if applicable)

2. Start simple record-keeping:

   • Note daily sales (for businesses)

   • Keep receipts for major expenses

   • Separate personal and business money

3. Attend free sensitization programs:

   • Check the FIRS website for schedules

   • Visit your local tax office

   • Follow @firsNigeria on social media

January 2026 Onwards:

• New rates apply gradually

• First filing under the new system due by March 31, 2026

• Penalty waivers for first-time compliers

Where Will The Tax Revenue Go? 

The government has committed to transparent reporting:

1. 35% – Education and healthcare

2. 25% – Infrastructure (roads, power)

3. 20% – Security and social services

4. 20% – Debt servicing and administration

Monthly public reports will show exactly how much was collected and how it’s spent.

How The New Tax Reforms Will Affect Nigeria’s Future

These reforms aren’t about punishing Nigerians; the intention is to build a sustainable economy where:

Nigeria relies less on oil (which fluctuates wildly)
Everyone pays their fair share (not just salary earners)
Services actually improve because there’s consistent funding
The informal sector gets recognition and support

How To Get Reliable Information On the New Tax Reforms

1. Ignore rumors – Only trust FIRS.gov.ng, Finance Ministry websites

2. No one will arrest you for asking questions at tax offices

3. Start small – If you’re overwhelmed, just get your TIN first

4. This is gradual – Changes will be implemented in phases

5. Your voice matters – Public consultations are ongoing

Official Resources to Get Help:

• FIRS Helpline: 0900 100 200 (toll-free)

• Website: www.firs.gov.ng/tax-reform-2026

• Walk-in Centers: Every state capital and major towns

• Mobile App: “FIRS Assistant” (coming December 2025)

Official Source: You can download the full Nigeria Tax Act 2025 draft PDF here

This guide is based on the official “Finance Act 2025” draft and FIRS policy documents as published in November 2024. Always verify with official sources, as implementation details may evolve.

Remember: An informed citizen is an empowered citizen. Share this knowledge with others who might be confused. Together, we can build a system that works for all Nigerians.

Published in the public interest by Seekers’ Hub. For verification, visit: https://firs.gov.ng/tax-reforms