The new tax bands — and why your "rate" isn't your real rate
The first ₦800,000 you earn each year is taxed at 0%. After that, only the slice of income inside each band is taxed at that band's rate — 15%, 18%, 21%, 23%, 25% — rising to 25% on income above ₦50,000,000.
Because each band only taxes the money inside it, your effective rate — the share of your whole income that actually goes to tax — is always lower than your top band. Earning a naira into the 25% band does not put your whole income on 25%.
Rent relief — real money, but only if you can prove it
Under NTA 2025 you can deduct 20% of the annual rent you actually pay, capped at ₦500,000 a year. This replaces the old Consolidated Relief Allowance (CRA), which is abolished.
The catch: it is the only personal relief left, and the tax office can ask you to prove the rent. If you own your home, or your employer houses you, there is no rent paid — so no rent relief.
To claim it, keep:- A tenancy agreement in your name showing the annual rent
- Rent receipts or bank transfers to your landlord for the year
- The landlord’s name and address (the same details that go on your return)
Who actually collects your tax (most people get this wrong)
There is no single tax office. If you are an individual — salary earner, freelancer, creator, sole trader — your Personal Income Tax is collected by your State Internal Revenue Service (LIRS in Lagos, FCT-IRS in Abuja, and the equivalent in every other state). The NRS does not collect ordinary individuals’ income tax.
The NRS (federal) collects company income tax, VAT and the Development Levy. The Joint Revenue Board (JRB) sits above both, harmonising the rules and running the one Tax ID so the two levels stop double-taxing people.
So "file your taxes" usually means file with your State IRS, not the NRS. Filing in the wrong place is one of the most common mistakes — our "Do I need to file?" tool routes you to the right office.
Rules can vary by state and may change — confirm specifics with your State IRS or a qualified tax professional.
VAT: when you have to start charging it
You only register for and charge VAT once your annual turnover passes ₦50,000,000 — the "small business" line. Below that you do not add 7.5% VAT to your invoices and you do not file VAT returns (though you still pay VAT on things you buy).
One exception: professional-services providers (law, accounting, medicine, engineering, consulting) have no small-business exemption — they are in VAT scope from the first naira. Separately, companies under ₦50,000,000 turnover pay 0% company income tax, but that is a different test from the VAT line even though the figure is the same.
Rules can vary by state and may change — confirm specifics with your State IRS or a qualified tax professional.
If the NRS or your State IRS sends you a letter
You have a clear ladder, and you should use it rather than panic-pay. First, object to the authority that issued the assessment — in writing, within 30 days. If they ignore you for 90 days, your objection is automatically upheld.
If they decide against you, the next two steps answer different questions. Disagree with the amount? Appeal to the Tax Appeal Tribunal within 30 days for a binding ruling (a further appeal to the High Court needs a 20% security deposit). Treated unfairly, delayed or harassed? That’s the Tax Ombud — independent, free, and it investigates within 14 days, though it can’t change the amount you owe.
Most people never learn this ladder exists. TaxJeje’s audit-defence flow walks you through each step — tracking every deadline and listing the documents that win an objection or appeal.
Rules can vary by state and may change — confirm specifics with your State IRS or a qualified tax professional.
Educational guidance under the Nigeria Tax Act 2025 and Tax Administration Act 2025 — not tax advice, and TaxJeje is not affiliated with the NRS or any State IRS. Figures are read straight from our verified rule set; the date on each card is when we last checked it against the primary gazette.
