From 1 January 2026, Nigeria begins its most sweeping tax overhaul since 1999, introducing new rules designed to protect low-income earners, simplify compliance, and plug revenue leakages through digital enforcement. Framed as a “new deal” between the state and taxpayers, the reform promises a broader, fairer, and more transparent system. Yet beyond the policy language, public reaction reveals a mix of hope, confusion, and scepticism.
At the centre of the overhaul are four coordinated laws: the Nigeria Tax Act, the Tax Administration Act, the Nigeria Revenue Service Act, and the Joint Revenue Board Act. Together, they repeal or update dozens of scattered provisions and replace them with a single, modern code that cuts duplication and clarifies responsibilities across tax authorities. The stated aim is not just to raise revenue, but to rebuild trust by making rules clearer and enforcement more predictable.
What the Reform Means for Individuals
The headline change is a more progressive personal income tax structure that aims to stop what critics have described as “taxing poverty.” Annual income up to about ₦800,000 now falls into a 0% tax band, exempting minimum-wage earners and many low-income workers. Above that threshold, rates rise gradually, with very high earners paying up to 25%, shifting the burden toward those with greater ability to pay.
Some taxpayers are already viewing the reform positively, even if the details remain unclear. Mr Terry, a media expert and postgraduate diploma student, said:
“I pay my tax, and that’s not an issue. Regarding this law, even though I haven’t fully grasped what it entails, I think it is for the betterment of the country.”
Reliefs have also been simplified and retargeted. The longstanding Consolidated Relief Allowance has been replaced with a more focused rent relief, capped at the lower of ₦500,000 or 20% of annual rent, to better reflect living costs in urban centres. At the same time, the scope of taxable income has expanded to clearly include capital gains, side hustles, and digital or virtual asset income, tightening compliance for wealthier and digitally active taxpayers.
Why the Old System Failed and What the New Law Promises
Taxation is, at its core, a civic obligation. It exists to fund government activities, redistribute income, provide public goods, and stabilise the economy. Yet in Nigeria, the gap between ideal and reality had grown wider. The old system often subjected individuals and businesses to overlapping taxes imposed by different tiers of government, creating hardship, uncertainty, and compliance fatigue.
In response, the Presidential Task Force on Fiscal Policy and Tax Reform, chaired by Professor Taiwo Oyedele, reviewed Nigeria’s tax laws to align them with economic realities and the rise of digital income streams. The resulting reform aims to remove multiple taxes, simplify administration and compliance, broaden the tax base, digitize processes, provide relief for low-income earners and SMEs, and ensure equity, fairness, and convenience in taxation.
Concerns remain, however, about how the reform was introduced. Mr Taiwo, an NIJ lecturer, said:
“This tax law took effect on the 1st of January, 2026, and I feel it would have been better if the government listened to the yearnings of Nigerians. There is so much controversy because we heard that the bill signed into law by the presidency is different from the one passed by the National Assembly.”
Compliance and the Digital Shift
One of the most far-reaching changes is the deep integration of tax compliance into everyday financial life. Tax Identification Numbers (TINs) are now closely linked to banking and BVN data, making it harder to conceal income. Annual tax filing is expected from all income earners, even those in the tax-free band, ensuring exemption status is formally recorded.
Tax clearance has become a gatekeeper for opportunity. Banks, government agencies, and even some foreign missions increasingly check tax status when evaluating applications for loans, contracts, scholarships, or visas.
Yet misinformation continues to cloud public understanding. Mr Adedapo, an entertainer and PGD student, observed:
“I would like to say kudos to the government for a job well done, but there is still so much misinformation in the media, so I feel that more education needs to be done.”
This underscores the critical role of media in explaining complex reforms and countering false narratives.
Benefits of the 2026 Tax Reform
Beyond restructuring Nigeria’s tax framework, the reform addresses long-standing weaknesses that made taxation burdensome for citizens and inefficient for government. Key benefits include:
•Equity and Inclusion: Low-income earners and SMEs now receive targeted relief, while very high earners shoulder a fairer share of the tax burden.
•Efficiency and Transparency: Consolidated laws, digitised filing, and integration with banking systems reduce corruption and compliance fatigue.
•Broadening the Tax Base: Informal and digital sectors are now clearly captured, creating opportunities for increased revenue without hiking rates.
•Simplified Administration: Registration, filing, and payment are streamlined, reducing confusion and overlap.
If implemented effectively, these laws could transform taxation from a source of fear into a shared tool for national development.
A Shared Responsibility
For journalists, media students, and citizens alike, the 2026 tax reform is more than an economic story. It is a test of citizenship, accountability, and public engagement. Its success will depend not only on policy and enforcement, but also on how effectively its message reaches the people it is meant to serve.
Ultimately, taxation will only become a true instrument of national development when the government and citizens see it as a shared responsibility, not just a mandatory payment.
Byline: PGD 3 2024/2025 Group 2
