TAX REFORM BILL 2026: SUMMARY

President Tinubu tax reform bill which was signed into law on June 26, 2025, and to take effect on January 1, 2026, has ushered in a new era for the country taxation system.

Here is a summary explanation of how the tax reform bill is;

1.  FEDERAL INLAND REVENUE SERVICE (FIRS) gets a new name:

Federal Inland Revenue Service is now called Nigeria Revenue Service (NRS).

2.  NRS takes full charge (A unified revenue collection): 

NRS- They’ll now manage the collection of revenue previously managed by agencies like Customs, NPA, NIMASA, and others.

3. No tax for low-income earners!

If you earn ₦800,000 or less per year, you’re completely exempt from Personal Income Tax (PIT). So no tax will be collected from low-income earners 

4. High earners taxed more

Only those earning over ₦50 million yearly will pay 25% Personal Income Tax (PIT). 

So for example, if in a year your Personal Income Tax is 50 million and above, you will pay 25% of the money (50M)

5. Small businesses are exempted from Tax:

Small business owners are no longer required to pay income tax. (No Tax). 

6. Corporate Tax Cut: Starting from 2026, company income tax for Medium & large businesses will be reduced from 30% to 25%.

Medium and large companies they will experience reduction in tax  from 30% to 25%. this aims to scale up and a thriving environment for productivity.

7. Value Added Tax (VAT) Exemptions on Essentials: There is no VAT on essential items like food, medicine, school fees, and electricity.

So there will not be price increase due to tax.

8. No tax Hike: VAT remains at 7.5% and corporate income tax stays at 30% - there has been no increase. 

9. New National Development Levy: A new 2 to 4% levy will go to education, innovation, and development funds like NELFUND, TETFund, NASENI, NITDA.

According to Government, levies from big companies will be used to fund institutions like TETFund, NELFUND, NITDA, e.t.c.

This Tax reform provides tax relief for low‑income earners, simplifies compliance for small businesses, and consolidates authority under a single revenue agency.