Nigeria Revenue Service Implementation: Poor Citizens Set for Major Relief Under New Tax Laws

The Nigeria Revenue Service (NRS) has officially commenced the implementation of a sweeping tax reform package effective January 1, 2026.

The new legal framework, which consolidates several fiscal acts, is designed to shift the tax burden away from low-income earners and toward high-net-worth individuals and large corporations.

According to the NRS, the primary objective of these reforms is to “tax prosperity rather than poverty,” ensuring that the most vulnerable segments of the population are shielded from the rising cost of living while maintaining a sustainable revenue stream for the government.

Expanded Income Tax Exemptions
One of the most significant shifts in the new law is the upward review of the tax-free threshold.

The NRS has highlighted several key changes to Personal Income Tax (PAYE):

• Full Exemption for Low Earners: Individuals earning the national minimum wage or an annual gross income of up to ₦800,000 are now entirely exempt from personal income tax.
• Progressive Tax Brackets: For those earning above the threshold, a new graduated system has been introduced. Rates start at 15% and only reach the 25% maximum for those earning above ₦50 million annually.
• New Reliefs: The old blanket Consolidated Relief Allowance has been replaced with targeted deductions. This includes a new rent relief of 20% (capped at ₦500,000) and full deductions for health insurance and pension contributions.

VAT Protections for Essential Goods
To further protect the purchasing power of the poor, the law expands the list of items exempt from Value Added Tax (VAT).

By keeping the VAT rate at 7.5% but widening exemptions, the government aims to lower the “shelf price” of basic necessities. Zero-rated or exempt items now include:

1. Basic Food Items: All locally produced staples and essential groceries.
2. Healthcare: All medical services and pharmaceutical products.
3. Education: Tuition fees and all educational materials/books.
4. Energy and Transport: Shared passenger road transport, electricity, and renewable energy equipment like solar panels.

Support for Small Businesses

The NRS has also clarified that the reforms are intended to stimulate the informal sector and small-scale entrepreneurship. Small companies with an annual turnover of ₦50 million or less are now fully exempt from Company Income Tax (CIT) and Capital Gains Tax.

Furthermore, businesses with a turnover under ₦100 million no longer need to charge or remit VAT, significantly reducing the administrative burden on micro-enterprises.

Administrative Oversight and Fair Play
To ensure these benefits reach the intended beneficiaries without harassment, the law establishes the Office of the Tax Ombudsman.

This independent body is tasked with resolving disputes and protecting taxpayers from arbitrary or excessive assessments by revenue officials.