How Will The New Tax Laws Affect You?: This Is What You Should Know

On Thursday, June 26, 2025, President Bola Ahmed Tinubu signed four major tax reform bills into law, describing the laws as pivotal to the success of the administration’s reforms and the country’s prosperity.

The bills are the Nigeria Tax Bill (Ease of Doing Business), Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill.

These new laws are designed to streamline Nigeria’s fragmented tax framework, consolidate multiple taxes, and create a unified, transparent tax administration under a single revenue agency.

As part of the administration’s broader push for fiscal reform, these bills will include measures like exempting minimum wage earners from income tax, maintaining VAT at 7.5%, rolling out a global minimum tax for multinationals, and establishing coordination structures across federal and state governments.

The reforms, recommended by the Presidential Committee on Fiscal Policy and Tax Reforms, aim to simplify compliance, incentivize investment, and ensure fairness; they will take effect from January 2026.

Tax Reforms Committee Comments On The Tax Laws

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, emphasized that Nigerians earning ₦250,000 or less monthly will no longer be required to pay personal income tax under the newly enacted tax laws.

His remarks followed shortly after President Tinubu’s assent to the new tax bills at the Presidential Villa in Abuja.

Oyedele clarified that the revised policies are part of a broader push to boost the economy, protect vulnerable populations, and enhance tax equity and compliance.

“This tax law will not put cash in your pocket, but at least it won’t take cash away from you if you are poor,”
Oyedele said.
He explained that the ₦250,000 monthly threshold was set as the poverty line in the Nigerian context after detailed deliberations that considered local realities, household sizes, and living conditions.

“We debated extensively to determine who should be classified as poor in Nigeria.

The World Bank might say $2.15 per day per person, but in reality, there are people who live in villages, produce their own food, and don’t spend much on transportation or utilities. So, we adjusted our poverty line based on the Nigerian context.


If a household earns ₦250,000 or less, they can only cover basic needs. They are considered poor, and they should not be taxed.”

The tax committee, established in July 2023, is tasked with modernizing Nigeria’s tax system to improve revenue generation without overburdening citizens.

Oyedele noted that middle-income earners, especially those making between ₦1.8 million and ₦2 million monthly would enjoy tax relief, while high-income earners would face a modest increase in their tax obligations.

“The middle class will enjoy some relief,” he said. “But those at the top of the income ladder will see a modest increase. That’s part of the fairness we’re trying to achieve.”

He further revealed that Nigeria currently collects only 30% of its potential tax revenue, and the new laws are expected to close the 70% shortfall by improving efficiency and ensuring that wealthier individuals and entities pay their fair share.

How Will The Tax Laws Affect You?

The impact is expected to be significant especially for low-income earners, small businesses and informal traders.

For people earning up to 1m naira ($650; £470) a year, a rent relief of 200,000 naira ($130) will be applied, effectively reducing their taxable income to 800,000 naira ($520).

This means they will no longer pay income tax, according to Andersen Nigeria, a tax and business advisory firm.

Sellers of essential goods and services such as food, healthcare, education, rent, power, and baby products will no longer have to charge a Value Added Tax (VAT), helping families better afford their basic needs.

Small businesses with annual turnover below 50m naira ($32,400) will no longer pay company income tax. They will also be allowed to file simpler returns, without needing audited accounts.

Large businesses will benefit from reduced corporate tax rates, dropping from 30% to 27.5% in 2025 and 25% in subsequent years.

They will also now be able to claim tax credits for VAT paid on expenses and assets, meaning they can get back the 7.5% that would have been paid as VAT.

There are also tax incentives for charitable groups, co-operatives, educational and religious organisations, provided their earnings do not come from commercial activities.

The new tax laws promises real benefits starting with more money in your pocket and improved public services.

By exempting essential goods such as food, healthcare, and education from VAT, the cost of living could drop significantly for many.

The success of this tax laws lies in its execution, if the government delivers on improved revenue use and fairness, most Nigerians could gain. But shortfalls in VAT collection, unequal revenue distribution, or failure to curb inflation could diminish these gains.