Personal Income Tax in Nigeria Is Changing, What You Do Not Know Could Cost You

Let us be honest, for many people, personal income tax in Nigeria used to feel like a routine you could sleepwalk through. File your form, tick a few boxes, and move on.

Not anymore.

Starting January 2026, the rules are changing in many ways and people need to adapt as the system changes. If you earn income from remote work, crypto, grants, or even severance pay, the Nigerian tax authorities are watching.

In this guide, we will break down exactly the likely changes in new tax reform, what is now taxable, and how you can prepare reasonable and reliable tax liability whether you are an employee, freelancer, or small business owner.

What is New with Personal Income Tax in Nigeria (Effective January 2026)?

The Federal Inland Revenue Service (FIRS) which would be recognized as Nigeria Revenue Service (NRS). and State Internal Revenue Services are enforcing a more structured tax regime. These reforms kick in from January 2026, and they will affect how individuals earn, report, and pay their taxes.

1. Minimum Wage Earners = Tax-Exempt

Anyone earning ₦30,000/month or less (₦800,000/year) will be exempt from personal income tax in Nigeria as of 2026.

What to do- If this applies to you or your employees, confirm payroll deductions are paused accordingly!

2. New Tax Brackets Are in Play

Modifications have been made to the flat rates. From January 2026, you will be taxed based on a tiered system

Annual Income Range (₦)	Tax Rate
First 800,000	0%
Next 2,200,000	15%
Next 9,000,000	18%
Next 13,000,000	21%
Next 25,000,000	23%
Above 50,000,000	25%

What to do- If you have multiple income streams, you may shift into a higher bracket. Recalculate now and plan ahead.

3. Rent Relief Replaces Consolidated Relief

The old Consolidated Relief Allowance (CRA) will be phased out and replaced with a specific rent deduction. If you personally pay rent, you can deduct the lesser of ₦500,000 or 20% of your annual rent from your taxable income.

What to do- Keep rent receipts and valid tenancy agreements. You will need them to claim this deduction from 2026 onward.

4. Grants, Awards & Prizes Now Count as Taxable Income

Previously, grants and awards were often treated as gifts. Under the new rules, they are classified as income. If you received startup funding, research grants, competition prizes, or stipends from NGOs or government bodies, those amounts are now subject to personal income tax. This includes

NGO fellowships
State or federal empowerment funds
Any monetary prize above ₦30,000

What to do- Document how the funds were used (especially if they were reinvested in your business) and prepare to report them in your annual return.

5. Compensation for Loss of Office Is Taxable

Redundancy pays, severance packages, and “golden handshakes” will become taxable unless specifically exempted.

What to do– If you have received such compensation recently or expect to, review all documents carefully. File what is necessary and avoid audit triggers

6. Digital Income Will Be Fully Taxable

Earnings from digital platforms are now considered fully taxable. This means freelancers, remote workers, e-commerce sellers, crypto traders, online tutors, and content creators will all fall within the tax net.

It no longer matters if the income is in naira or foreign currency, whether it comes through PayPal, crypto wallets, or direct transfers, as long as the money lands in your account, it counts Freelancing or contract work. This includes;

E-commerce sales
Cryptocurrency trades
Online tutoring, writing, or affiliate marketing

What to do- Track your online earnings and plan to remit 15–25% as personal income tax. Start organizing your invoices now. It will save you a headache later