If you’re among the Nigerians earning ₦1 million or more monthly, congratulations—you officially belong to what the new tax law calls the “doing okay” group. But with this shiny new status comes a few changes to how much of your income the government expects to collect.
In case you missed it, President Bola Tinubu recently signed the Nigeria Tax Act, 2025 into law. Think of it like a much-needed system update—just as Apple rolls out new iOS upgrades to improve user experience (Samsung users, you too can relate), this tax reform aims to modernize how taxes are collected and administered in the country.
Why this matters
As with every upgrade, some old features stay, new ones are added, and others get removed. This law overhaul is meant to make the process simpler, more equitable, and more inclusive, especially in how people are taxed based on their earnings.
But—depending on how much you earn—it will mean different things for different people.
So, what’s changing if you earn ₦1M+ monthly?
First off, let’s establish the basics:
Under the Nigeria Tax Act, 2025, everyone who earns money, whether by selling goods or offering services is expected to pay income tax. The only exception is for individuals earning below ₦800,000 per year, who are now officially exempt.
That exemption doesn’t apply to you if you earn ₦1 million monthly—meaning your annual income is ₦12 million and above. So yes, the taxman will be knocking at your payslip monthly.
Your PAYE is still very much alive
The method of Pay As You Earn (PAYE) remains unchanged. That means your employer—whether it’s a fintech, consulting firm, or bank—will deduct your tax at the source before crediting your account with your net salary. They collect on behalf of the government and are responsible for remitting it.
This saves you from personal compliance headaches—but it also means less take-home for you, depending on your tax bracket.
The new tax brackets—where do you fall?
According to the law:
₦800,000 to ₦3 million annual income → taxed at 15%
₦3 million to ₦12 million annual income → taxed at 18%
₦12 million and above (which includes you if you earn ₦1M/month) → taxed at above 18%, though exact rates for this tier are still being detailed
That means up to 18% or more of your earnings may go to taxes each year. However, that’s before deductions.
Deductions and exemptions—there’s good news!
Yes, there are ways to reduce your taxable income legally under the new tax act. The law now allows for certain deductions, which could lower how much tax you pay.
These include:
Donations to registered NGOs or charities (not your cousin’s GoFundMe for a trip to Dubai)
Certain job-related expenses (specifics still to be clarified by tax authorities)
Example: If you earn ₦1.1M monthly and make consistent donations to a verified NGO—say, one that provides sanitary kits to girls in Ajangbadi that amount may be deductible, lowering the income on which you’re taxed.
Bottom line
The Nigeria Tax Act, 2025, isn’t designed to punish high earners; it’s intended to create a more transparent and fair system that protects low-income earners while ensuring higher earners contribute their share. For those in the upper income brackets, the focus now is on tax responsibility, structure, and possible relief through smart planning.
So, if you're earning ₦1 million and up monthly, the smart move isn't to panic but to understand your tax bracket, explore legal deductions, and stay compliant.
