Nigeria’s 2025 Tax Reform: New Costs, Reliefs, and What It Means for Your Wallet

In June 2025, President Bola Tinubu signed four major laws that reshape Nigeria’s tax landscape: the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and the Joint Revenue Board Act (JRBA). Together, they mark the boldest tax reform in Nigeria in decades, changing how taxes are collected, shared, and felt by citizens.

While corporations focus on compliance, ordinary Nigerians want answers: what does this mean for personal income, the cost of living, and inflation? This article explains the new taxes and surcharges, available reliefs, and the bigger picture of federal vs state revenue sharing.

New Taxes and Surcharges Citizens Will Face

Updated Personal Income Tax Bands in Nigeria

The new system introduces progressive rates. Income up to ₦800,000 per year is tax-free, while earnings above this attract rates ranging from 15% to 25%. The removal of the Consolidated Relief Allowance means middle- and high-income earners will now pay more than before.

Crypto and Virtual Asset Tax in Nigeria

Digital assets such as Bitcoin, Ethereum, and NFTs are now taxable. Anyone trading, mining, or receiving payments in crypto must pay 10% capital gains tax on disposals, alongside income tax where earnings qualify as regular income. In addition, exchanges are required to apply 7.5% VAT on transaction fees, formalizing Nigeria’s crypto economy.

Broader Taxable Income Sources

The reforms expand what counts as taxable income. Grants, honoraria, commissions, and foreign-sourced income for residents now fall under Nigeria’s tax net. Freelancers, tech workers, and remote professionals will feel this shift most, as previously untaxed earnings abroad are now liable.

Reliefs and Exemptions for Citizens

Zero Tax for Low Earners

Individuals earning ₦800,000 or less annually pay no tax. On paper, this protects the poorest households. In practice, however, the threshold is low: ₦800,000 equals about ₦67,000 per month. Once you cross that line, a 15% rate cuts monthly take-home pay below ₦57,000. With many Nigerians earning between ₦60,000–₦80,000 monthly, most fall into the taxable bracket.

Rent Relief Deduction

Tenants can now deduct up to 20% of annual rent (capped at ₦500,000) when calculating taxable income. This provides some relief for renters, but homeowners receive no comparable benefit.

Compensation Relief

Exemptions on severance pay have been expanded from ₦10 million to ₦50 million. This shields more laid-off workers from tax pressure when receiving payouts.

Overall, while these reliefs reduce the burden on specific groups, they are narrow in scope and will not offset the broader rise in tax obligations.

Impact on Inflation and Cost of Living

The Nigeria 2025 tax reform will likely ripple through household budgets and prices. Higher income taxes reduce disposable income, slowing spending among middle-income earners. Businesses facing new compliance costs are expected to pass these onto consumers, raising the prices of goods and services.

Although Nigeria’s inflation has declined for five consecutive months, the new VAT enforcement and higher indirect costs risk reversing this trend. The Central Bank of Nigeria’s tight monetary stance may soften the impact, but everyday Nigerians will still feel pressure.

For the crypto market in Nigeria, stricter taxes and reporting requirements may discourage casual users but encourage a shift to regulated platforms. Long-term, this could stabilize adoption, though short-term enthusiasm may cool.

Federal vs State Revenue Sharing

Beyond citizens’ pockets, the reforms reshape Nigeria’s fiscal federalism. A key question is how new revenues will be shared between the federal and state governments. If allocations to states increase and funds are deployed transparently, Nigerians could see improvements in infrastructure, education, and healthcare. Without accountability, however, higher taxes risk becoming just another burden with little visible return.

The bottom line is that the 2025 Nigeria tax reform is sweeping and ambitious. For citizens, it introduces higher costs with limited reliefs, while adding pressure on inflation and consumption. From personal income tax in Nigeria to crypto taxation, nearly everyone will feel its effects.

With most provisions taking effect from January 2026, every worker, entrepreneur, and trader should review the new laws, calculate obligations, and plan ahead. The central question remains: will the revenue be reinvested in better public services or will citizens simply pay more without seeing change?