Nigeria has exempted individuals earning N800,000 or less annually from personal income tax under new legislation that restructures the country's tax system, the Nigeria Revenue Service said. The Regional Administrator of the NRS, Danjuma Manga, disclosed the changes on Thursday during a symposium in Gombe, stating that the reforms also apply to those earning the national minimum wage of N70,000 monthly or less. According to Manga, the framework was designed to encourage economic activity and protect low-income earners rather than impose unnecessary tax burdens, while eligible reliefs and deductions would further reduce taxable income for qualifying workers.
The 2025 tax reforms rest on four pieces of legislation that have fundamentally altered how Nigeria's tax system operates in the areas of tax policy, legislation and administration. Manga explained that the reforms aim to harmonise tax administration, improve compliance, promote fairness and strengthen the capacity of federal, state and local governments to finance development. He stressed that tax payment is a constitutional responsibility of citizens under Section 24, subsection four of the Nigerian Constitution, but only when income is earned, profit is made or assets are disposed of for a gain.
The new framework has also redistributed federally collected revenue among Nigeria's three tiers of government. The Federal Government's share has been reduced to 10 per cent, while state governments receive 55 per cent and local governments receive 35 per cent, a shift that involves the Federal Government ceding five percentage points to states. The allocation to states will be distributed based on equality, population and internally generated revenue, with the reforms changing the weight assigned to these criteria to reward states that improve tax collection and compliance.
Manga identified the Nigeria Revenue Service, state internal revenue services and local government revenue committees as the principal institutions responsible for administering taxes across the federation. He urged Federal Government agencies and other institutions responsible for deducting taxes at source to ensure that deductions from contractors' payments and other taxable transactions are remitted promptly, stating that improved tax compliance would strengthen public revenue and support infrastructure and social services delivery. The reforms are expected to improve the ease of doing business and encourage the growth of micro, small and medium-sized enterprises across the country, Manga said.
For savers and low-income earners in Nigeria, the exemption of those earning N800,000 or less annually from personal income tax means they will have zero tax liability on this income.