Photo source: Premium Times Nigeria.
|
Getting your Trinity Audio player ready...
|
Claim: Popular blogger Tunde Ednut recently claimed that the federal government of Nigeria has placed a 20% personal income tax on Nigerians earning N800,000 and above yearly from January 2026.
Verdict: Misleading! President Bola Tinubu’s recent tax bills are progressive, and tax rates may vary according to income levels.
Full Text
In June 2025, President Bola Tinubu signed four tax reform bills into law, stating that they signal Nigeria’s readiness for modern economic growth and international investment. This comes against the backdrop of the establishment of a Presidential Committee on Fiscal Policy and Tax Reforms in July 2023, headed by Taiwo Oyedele.
These laws are the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act.
Subsequently, Solomon Adeola, chairperson of the Senate Committee on Appropriation, said that with the tax bills signed into law, Nigerians who earn below N800,000 yearly will be exempted from paying personal income tax. He also noted that this will ease the financial burden on low-income earners and boost their disposable income.
Recall that the tax reform was met with heavy criticism, particularly from Borno governor Babagana Zulum, who claimed only Lagos would benefit from it. The Northern States Governors Forum also rejected the proposed amendment to the distribution of Value Added Tax (VAT), alleging that it would hurt the region. The backlash prompted the review of the tax reform bills.
Recently, popular blogger Tunde Ednut claimed that anyone who earns above N800,000 yearly in Nigeria will be charged 20% personal income tax. The blogger said this law affects both Nigerians and foreigners who work or do business in Nigeria.
He wrote, “Breaking: Starting January 1, 2026, anyone, Nigerian or foreigner who does business in Nigeria and earns N800,000 or more in a year will have to pay 20% tax on their total yearly income, whether they live in Nigeria or not.”
But is this true? Due to the sensitivity of the issue and its potential effect on Nigerians, Dubawa fact-checked it.
Verification
According to the Nigerian Economic Summit Group (NESG), personal income tax (PIT), under the new tax reform, takes a more progressive approach with tax rates ranging from 0% to 25%. It explained that individuals who earn less than N800,000 annually are entirely exempted from paying personal income tax.
A PwC document highlighted the previous personal income tax chargeable on annual income. According to the document, those earning less than N300,000 annually before now were subject to 7% tax, while those who earned above N3,200,000 were charged 24% rate.
However, in line with the Finance Act of 2020, employees who earned the national minimum wage (NGN30,000 till 30 Apr. 2024 and NGN 70,000 effective 1 May 2024) were exempted from personal income tax and not liable to PAYE.
The new PIT, which will become effective in January 2026, is said to adopt a progressive system, with rates represented in the table below.
| Old Personal Income Tax (PIT) rate | New Personal Income Tax (PIT) rate | ||
| Annual income (NGN) | PIT rate (%) | Yearly income (NGN) | PIT rate (%) |
| First 300,000 | 7 | First 800,000 | 0 |
| Next 300,000 | 11 | Next 2,200,000 (800,000 – 3,000,000) | 15 |
| Next 500,000 | 15 | Next 9,000,000 (3,000,000 – 12,000,000) | 18 |
| Next 500,000 | 19 | Next 13,000,000 (12,000,000 – 25,000,000) | 21 |
| Next 1,600,000 | 21 | Next 25,000,000 (25,000,000 – 50,000,000) | 23 |
| Above 3,200,000 | 24 | Above 50,000,000 | 25 |
The table above clearly shows that Tunde’s claim is misleading. Depending on their income levels, some employees will be taxed below 20%, while others will be taxed above 20%.
Before the new bill, companies had a 0% corporate income tax (CIT) for small companies (those with a gross turnover of N25 million or less). In comparison, medium companies (with a gross turnover of above N25 million to N100 million) were charged a 20% CIT rate. The CIT rate was 30% for large companies (with gross turnover greater than NGN 100 million).
Under the new tax laws, however, small companies (those with an annual turnover of N50 million or less) and fixed assets valued at N250 million or less are subject to a 0% CIT. Meanwhile, companies providing professional services are not to be classified as small companies. Small companies are also exempt from capital gains tax.
Meanwhile, other companies are taxed at a rate of 30%, alongside a 4% Development Levy on assessable profits replacing multiple sectoral levies, including Tertiary Education Tax (TET 3%), NASENI Levy (0.25%), NITDA Levy (1%), and Police Trust Fund Levy (0.005%).
Andersen, an independent tax and business advisory firm, noted that while this change will help reduce the tax burden on small businesses and enable them to reinvest profits into business growth, it will also have a significant impact on larger companies, which now face a higher tax burden than their previous 20% tax rate.
It added that this could potentially reduce reinvestment in business expansion and discourage smaller SMEs from scaling beyond ₦50 million to avoid the higher tax burden.
Conclusion
The claim that Nigerians who earn above N800,000 monthly will be charged a 20% tax rate starting Jan. 2026 is misleading. The new tax regime adopts a progressive approach, and tax rates may vary.
