Complete Nigeria Tax Guide 2026: Everything You Need to Know About NTA 2025
The Nigeria Tax Act 2025 changed everything. New tax bands, abolished CRA, rent relief, and digital-first compliance. Here's your complete guide to navigating Nigerian taxes in 2026.
Complete Nigeria Tax Guide 2026: Everything You Need to Know About NTA 2025
The Nigeria Tax Act 2025 is fully operational as of January 1, 2026. This comprehensive guide covers everything you need to know about the new tax landscape in Nigeria.
Key Changes at a Glance
- FIRS has transitioned to Nigeria Revenue Service (NRS)
- Digital-first approach to taxation is mandated
- NIN (individuals) and CAC RC# (companies) are now unified Tax IDs
- CRA is abolished - replaced by new relief system
- First ₦800,000 of income is now tax-free
1. Personal Income Tax (PIT / PAYE)
The New Tax-Free Threshold
Great news for Nigerian workers! Annual income up to ₦800,000 is now completely tax-free. This means if you earn ₦66,667 per month or less, you pay zero income tax.
Goodbye CRA, Hello Rent Relief
The Consolidated Relief Allowance (CRA) has been officially abolished. The old formula of ₦200,000 + 20% × Gross Income is gone.
Instead, we now have Rent Relief:
- Formula: Lower of 20% of annual rent paid OR ₦500,000
- Requirements: Valid tenancy agreement + proof of payment
2026 Progressive Tax Bands
| Income Range | Rate |
|---|---|
| First ₦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% |
Statutory Deductions Still Apply
These are still deducted from your gross income before tax:
- Pension: Employee portion (typically 8% of Basic + Housing + Transport)
- NHF: National Housing Fund (2.5% of monthly income)
- NHIS: National Health Insurance Scheme contributions
- Life Insurance: Premiums on life policies
2. Company Income Tax (CIT)
Standard Rate
The Company Income Tax rate for 2026 onwards is 30%.
Small Company Exemption
Your company qualifies as "small" if BOTH conditions are met:
- Annual Turnover ≤ ₦50 Million
- Fixed Assets ≤ ₦250 Million
Small Company Benefits:
- CIT: 0%
- CGT: Exempt
- Development Levy: Exempt
Development Levy
The Development Levy replaces the old TET, NITDA, and NASENI levies:
| Period | Rate |
|---|---|
| 2025 – 2026 | 4% |
| 2027 – 2029 | 3% |
| 2030 onwards | 2% |
3. Capital Gains Tax (CGT)
For Companies
- Rate: 30% on all chargeable asset disposals
- Digital Assets: Crypto and NFTs are explicitly included
- Small companies are exempt
For Individuals
- Capital gains are treated as normal income
- Uses the same progressive bands as PIT (0% – 25%)
- Add your capital gains to your chargeable income and apply the tax bands
Compensation for Loss of Office
The first ₦50 Million is exempt. Any excess is taxed as income.
4. Value Added Tax (VAT)
Standard Rate
VAT remains at 7.5%.
Expanded Input VAT Recovery
You can now recover input VAT on:
- Goods for resale ✅
- Services (new) ✅
- Capital Assets (new) ✅
Mandatory E-Invoicing
All VAT-registered businesses must use the NRS Electronic Fiscal System (EFS). Invoices must be validated in real-time or within 24 hours. Invalid invoices = no Input VAT claim.
5. Withholding Tax (WHT)
Key Compliance Rules
- No Tax ID = Double Rate - If the beneficiary lacks a valid NIN/CAC RC#, apply 2× the base rate
- Small Business Exemption - Supplier turnover ≤ ₦50M AND Transaction ≤ ₦2M = 0% WHT
WHT Rates Table
| Transaction Type | Resident | Non-Resident |
|---|---|---|
| Dividends, Interest, Rent | 10% | 10% |
| Royalties (Individual) | 5% | 10% |
| Professional/Management | 5% | 10% |
| Supply of Goods | 2% | 5% |
| Directors' Fees | 15% | 20% |
6. The New Tax ID System
Unified Tax IDs
| Entity Type | Tax ID | Format |
|---|---|---|
| Individuals | NIN | 11 digits |
| Companies | CAC RC# | RC + 6-7 digits |
Mandatory Use Cases (from January 1, 2026)
A valid Tax ID is now required for:
- Operating bank accounts
- Registering for insurance
- Trading stocks and securities
- Government contracts
- All taxable financial transactions
7. Filing Deadlines
| Tax Type | Deadline |
|---|---|
| CIT | 6 months after year end |
| PIT (Annual) | March 31st |
| PAYE Remittance | 10th of following month |
| VAT Returns | 21st of following month |
| WHT Remittance | 21st (Federal) / 30th (State) |
Penalties
| Offence | Penalty |
|---|---|
| Late Filing (Month 1) | ₦100,000 |
| Late Filing (Subsequent) | ₦50,000/month |
| Late Payment | CBN MPR + spread (5-10%) |
8. Common Compliance Errors to Avoid
| Error | Consequence | Solution |
|---|---|---|
| Using old TIN format | Registration rejected | Use 11-digit NIN or RC# |
| Missing Tax ID on WHT | Double rate applied | Validate Tax ID before transaction |
| Invoice without IRN | Buyer can't claim Input VAT | Submit to NRS EFS before issuing |
Need Help Calculating Your Taxes?
Use our free Nigerian Tax Calculator to instantly calculate your 2026 tax liability with the new NTA 2025 rules. Try it now at FinanceGuard.ng.
Last updated: February 15, 2026
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