What Nigerians Will Pay Under Tax Laws Tinubu Just Signed

President Bola Ahmed Tinubu on Thursday, June 26, signed into law four sweeping tax reform bills aimed at transforming Nigeria’s outdated and burdensome tax system. The newly signed legislation is designed not only to boost economic activity but also to protect low-income earners, empower small businesses, and make tax collection more transparent and efficient. These reforms, which have been months in the making, represent a fundamental shift in the government’s approach to taxation—one that places people, productivity, and fairness at the center of fiscal policy.

The four laws signed by President Tinubu include the Nigerian Tax Bill, the Nigerian Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. Together, these laws consolidate numerous overlapping tax laws into one coherent legal framework, streamline tax collection through digital platforms, and create a more independent tax authority called the Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS). The reforms also establish mechanisms like the Tax Appeal Tribunal and a Tax Ombudsman to give taxpayers a voice and protect their rights.

One of the most significant provisions in the new law is the exemption of Nigerians earning ₦250,000 or less per month from paying personal income tax. According to Taiwo Oyedele, Chairman of the Presidential Tax Reform Committee, individuals within this income bracket are considered economically vulnerable and should not be burdened with tax obligations. He explained that the committee, after extensive analysis, concluded that most Nigerian households are surviving on two incomes, and for a family of five, ₦250,000 monthly just barely meets basic needs. “They are not rich. They are poor. They should not be taxed,” Oyedele said on Channels Television.

This tax exemption signals a clear departure from the old system, which often penalized low-income earners through deductions and levies they could barely afford. Now, Nigerians who fall within this category will have more room to breathe financially. “This tax law will not give you cash in your pocket,” Oyedele added, “but at least it won’t take your cash away if you are poor.”

Small and medium-scale businesses are also among the biggest winners in the new framework. Companies with annual turnover below ₦50 million will no longer be required to pay company income tax. This provision is particularly significant in Nigeria, where micro, small, and informal businesses make up a large portion of the economy but have often struggled to grow due to harsh taxation and poor access to credit. By removing tax barriers for these enterprises, the government hopes to encourage registration, expansion, and long-term sustainability.

Another impactful change comes through a new formula for sharing Value Added Tax (VAT) revenue. Previously, states contributed to VAT but received very little in return for their efforts. Under the new formula, 30% of VAT generated in each state will remain in that state, 50% will be shared equally across all states, and 20% will be distributed based on population. This change incentivizes state governments to grow their local economies, support business environments, and take tax compliance more seriously—knowing that their efforts will directly benefit them.

The reforms also mark a major move toward digitalization and efficiency in tax administration. The new Nigeria Revenue Service will operate with greater independence and utilize modern digital systems to track, assess, and collect taxes more accurately. This means reduced corruption, fewer manual bottlenecks, and easier processes for taxpayers. The inclusion of a Tax Appeal Tribunal and Ombudsman also ensures that disputes can be fairly addressed without harassment or bureaucratic abuse.

These reforms are not just administrative—they reflect a philosophy of governance that prioritizes economic justice and responsible leadership. For freelancers, artisans, online vendors, and other self-employed Nigerians, it means fewer hidden charges and a clearer understanding of their tax obligations. For formal sector workers, especially those earning below the ₦250,000 threshold, it means retaining more of their income without fear of arbitrary deductions.

In a country where tax collection has historically been fraught with confusion, inefficiency, and a lack of trust, these laws are being hailed as a turning point. As Oyedele noted, the reforms are efficiency-driven, growth-focused, and people-centered. “We are not increasing taxes; we are restructuring and simplifying them to serve people better,” he said.

With the laws set to take effect from January 2026, the focus will now shift to implementation. Nigerians can expect a more stable and predictable tax environment—one where taxes are not just collected, but used to improve lives. And perhaps, for the first time in a long while, many will feel that the government is not just taking, but also giving something back.