Tinubu’s New Tax Law Affects Both Rich and Poor — Here’s What It Means for You

On Thursday, June 26, President Bola Tinubu signed four new tax laws into effect — a move he claimed would open “doors to a new economy and business opportunities.”

Since it was introduced before the National Assembly, the tax reform has been a subject of public debate, with the initial draft sparking controversy over its intention to review and change how Value Added Tax (VAT) is shared among the different states. Now, the four tax bills signed by Tinubu are as follows:

Nigeria Tax Bill (Ease of Doing Business)

This bill merges Nigeria’s scattered tax laws into one clear, easy-to-understand code. It eliminates over 50 overlapping taxes to make doing business simpler.

Nigeria Tax Administration Bill

This bill creates a single, unified system for collecting taxes across all levels of government — federal, state, and local. It aims to reduce confusion and promote consistency nationwide.

Nigeria Revenue Service (Establishment) Bill

This law replaces the old FIRS with a new, independent tax agency called the Nigeria Revenue Service (NRS). The goal is to make tax collection more efficient and professional.

Joint Revenue Board (Establishment) Bill

This bill sets up a formal structure for cooperation between tax authorities and creates tools like a Tax Ombudsman and Tax Tribunal to handle complaints and disputes fairly.

But let’s break it down in plain English so that, whether you’re a low-income earner, a small shop owner, or a corporate boss, you’ll understand how this new law could affect your pocket — for better or worse.

If You’re Earning Less Than ₦1 Million a Year…

The good news is that you won’t be paying any income tax.

Under the new law, if your yearly income is ₦1 million or less, you’ll get a ₦200,000 rent relief that reduces your taxable income. That means you’re left with ₦800,000 — and according to the new rules, that’s now tax-free.

This is meant to give low-income workers breathing space, especially as the cost of food, transport, and rent keeps climbing.

If You’re a Middle-Class or Working-Class Nigerian…

That earns above ₦1 million, you’ll get to pay tax, but the government says the system is now simpler and fairer. You may not have to deal with multiple confusing taxes anymore.

Also, because essential items like food, healthcare, education, baby products, rent, electricity, and transport are now VAT-exempt, you should see some relief in your everyday spending.

No, it doesn’t mean prices will suddenly drop — but ideally, sellers of these essentials won’t add VAT to your bills anymore.

If you don’t know what VAT (Value Added Tax) is, it is that extra 7.5% you pay on goods and services every time you buy something that isn’t tax-exempt. For example, if you buy a medicine for ₦100,000, you’ll likely pay ₦107,500 — that extra ₦7,500 is VAT going to the government.

If You’re a Content Creator or Work Remotely for a Foreign Company…

You’re about to start paying tax. Let’s assume your YouTube channel pays you $1,000 every month — that’s above the tax-free threshold. Under the new law, you’re now required to register with your state tax authority, declare your income in naira, and pay the appropriate tax.

This also applies to tech bros and remote workers living in Nigeria but earning from foreign companies.

If You Run a Small Business…

And your business makes less than ₦50 million per year, you no longer have to pay company income tax.

You also won’t be required to submit audited accounts. Instead, you’ll file a simpler, more straightforward return. This should reduce your paperwork stress — and possibly save you the cost of hiring an accountant.

So, whether you’re a hair salon owner, boutique operator, or food vendor, the goal is to support you to grow.

If You’re a Big Company or Corporation…

You’re not left out either.

Corporate tax rates are being reduced gradually. From the usual 30%, it drops to 27.5% in 2025, and then to 25% in future years.

Also, you can now claim tax credits for the VAT you paid on business expenses and assets. That means if you paid VAT while buying equipment or services for your company, you can now get some of that money back. It’s a way of rewarding investment.

So, while the tax rate is lower, the government is expecting bigger firms to comply more strictly — no more hiding behind loopholes.

If You’re a Charity, Religious Body, or Cooperative…

You’re also getting some breathing space — as long as your income isn’t from commercial activities.

So, if you’re running a church, mosque, NGO, or cooperative society, and you’re not engaging in full-blown business operations, your tax burden will be lighter or non-existent.

But the taxman is watching: if your group is making money like a company, expect to be taxed like one.

If You Spend Big or Trade Stocks…

Wealthy people that trade millions on stock or spend on luxury lifestyle are going to be taxed more under this new tax law.

People who spend on premium services, luxury goods, and large stock sales will now pay more. Capital gains tax will apply when you make a large profit from selling shares or investments.

So, if you’re trading millions on the stock market or splurging on high-end goods, expect the government to take its cut.

So, Why All These Changes?

Experts has since lamented that Nigeria’s tax system has been a mess for years — confusing, full of small overlapping taxes, and unfairly harsh on low-income earners. Worse, the country barely collects enough tax to fund basic things like hospitals, schools, and roads.

Right now, Nigeria’s tax-to-GDP ratio (how much we collect in tax compared to the size of our economy) is just about 10%. The African average? Around 16–18%.

The government says it wants to raise this to 18% by 2026 — but not by squeezing the poor. Instead, it’s simplifying the tax code, making tax collection more efficient, and hoping more people will pay voluntarily.

“What we did a few minutes ago is the way forward for our country’s prosperity. Leadership must help people take off, lead the way, and navigate every turn and twist. We must help them reach their destination. That is what we are doing,” President Tinubu said during the signing ceremony at the State house yesterday.