Nigeria’s 2027 Tax Rates: How Much Will Workers, Freelancers and Businesses Pay?
By Google News Category Tax ·
The new tax laws, which took effect in January 2026, will still determine how individuals and businesses calculate and report their tax obligations in 2027, but the amount payable will depend on income, allowable deductions and the type of business involved.
The reforms brought new personal income tax bands, rent relief and changes to company taxation and tax administration.
Employees, freelancers and business owners are now keen to know what counts as taxable income, which deductions can reduce the bill and when returns must be submitted.
Here is what the current regulations mean for the 2027 tax year.
The Nigeria Tax Act 2025 introduced a graduated personal income tax system. The rates apply to portions of an individual's annual chargeable income, not the entire salary at one rate.
An individual with annual chargeable income of ₦5 million, for example, would pay ₦690,000 in tax under these bands, nothing on the first ₦800,000, ₦330,000 on the next ₦2.2 million and ₦360,000 on the remaining ₦2 million.
This is not the same as saying someone earning ₦5 million in gross salary will necessarily pay ₦690,000. Chargeable income is calculated after eligible deductions and reliefs.
The highest rate of 25% applies only to the portion of chargeable income above ₦50 million. Individuals earning the national minimum wage are exempt from personal income tax under the Act.
The new law replaced the former Consolidated Relief Allowance with eligible deductions, including rent relief.
Individuals can claim relief equal to 20% of annual rent paid, capped at ₦500,000. A person who pays ₦2 million in annual rent, for instance, may claim ₦400,000, provided the payment and required details are properly declared.
The Joint Revenue Board's Personal Income Tax Guidelines 2026 require taxpayers claiming rent relief to provide the tenant's name, actual rent paid and period covered, property address, and the landlord's full name alongside a mobile number, Tax ID or National Identification Number.
Other eligible deductions include pension contributions, National Housing Fund contributions, National Health Insurance Scheme contributions, qualifying life assurance premiums and interest on loans for developing an owner-occupied residential house.
These deductions must be claimed and supported with appropriate records. Taxpayers should retain rent receipts, pension statements, insurance documents and relevant loan records rather than assume every payment will automatically be deducted from their taxable income.
Working remotely for a foreign employer does not automatically make a Nigerian resident's earnings tax-free.
Section 12 of the Nigeria Tax Act states that the income, gains and profits of a Nigerian resident individual are taxable in Nigeria wherever they arise, whether or not the money is brought into or received in the country.
The Act defines a resident individual through several conditions, including being domiciled in Nigeria, having a permanent home or habitual abode in the country, having substantial economic and immediate family ties, or spending at least 183 days in Nigeria within a 12-month period.
Consequently, a Nigerian resident earning a salary from a foreign employer may still have a Nigerian personal income tax obligation. The same principle applies to income from foreign clients and other overseas sources.
However, the tax treatment of a particular worker depends on the person's residency, the nature of the employment and the…
Originally published by Google News Category Tax
