Earn ₦800,000 or Less a Year? Here’s What Nigeria’s New Tax Law Says

On 22 October 2026, reports quoted the Nigeria Revenue Service (NRS) clarifying that individuals earning ₦800,000 or less annually are exempt from personal income tax under the new framework.

But what does that mean in practice, and does being exempt from paying personal income tax mean you have no tax obligations at all?

Who Qualifies for the Exemption?

Under the Nigeria Tax Act 2025, the first ₦800,000 of taxable income is subject to a 0% personal income tax rate. This forms part of a progressive tax structure in which higher portions of taxable income are taxed at higher rates.

The distinction between annual income and taxable income matters. Taxable income is calculated after applicable exemptions, reliefs and eligible deductions have been taken into account. Therefore, the amount someone earns is not always the same as the amount on which their tax is calculated.

The new framework also provides relief for people earning the national minimum wage or less, subject to the applicable provisions.

Does This Mean Everyone Earning More Than ₦800,000 Pays Tax on Their Entire Income?

No. Nigeria uses a progressive personal income tax system.

Under this system, the relevant portions of taxable income are taxed at different rates. The first ₦800,000 is taxed at 0%, while the next portions are taxed at 15%, 18%, 21%, 23% and 25%, depending on the level of taxable income.

This means someone whose taxable income exceeds ₦800,000 does not automatically pay tax on their entire income at the rate that applies to their highest income band.

Eligible deductions and reliefs can also affect the final amount payable.

Does the Exemption Remove Every Tax Obligation?

No. An exemption from personal income tax does not automatically remove every tax-related obligation.

Registration, tax identification and filing requirements depend on the applicable law and the individual’s circumstances. Also, personal income tax is separate from other taxes that may apply to particular transactions or activities.

For example, a person may not owe personal income tax but could still need to understand the tax treatment of a business transaction or another source of income.

It is therefore important to distinguish between being exempt from paying a particular tax and being exempt from every tax obligation.

What Should Low-Income Earners Do?

Start by understanding how your income is classified and whether any eligible reliefs or deductions apply. Keep records of your earnings and relevant deductions, especially if you earn from more than one source.

If you are employed, review how your employer calculates PAYE. If you are self-employed, keep clear records of your income and business expenses so you can determine your tax position accurately.

The new rules are intended to provide relief to lower-income earners, but understanding how the rules apply to your circumstances remains important.

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