07/10/2025
The New Nigeria Tax Law Explained in a way that even Grandma in the village will understand...
Let me tell you a short story.
Mama Ngozi sells garri and tomatoes in the market. Every day she shouts:
âCustomer, buy from me, e sweet well wellâ
She makes âŚ5,000ââŚ10,000 profit daily. But guess what?
From January 1st, 2026, Nigeriaâs new tax law will affect people like Mama Ngozi too, and if she doesnât understand it, she will lose money.
What exactly is being taxed?
Let me be honest:
The government is not coming for your transfers, deposits, or withdrawals.
If Mama Ngozi sends money to her son in school through POS, that one is not tax.
What the government wants is your income, the money you earn as profit, salary, or interest.
So Mama Ngoziâs âŚ5,000 daily profit is what is taxable, not the âŚ20,000 she keeps under her pillow.
If Mama Ngoziâs daughter, Ngozi, is still in 200 level with no income, no tax for her.
If Papa Adamu is retired and only receiving pension, no tax for him.
Even soldiers and military salaries are tax-free. Thatâs the law.
Let me tell you the Rich Manâs Secret (and the Poor Manâs Mistake)
Hereâs where the game changes.
Alhaji Musa, a rich man in the same market, doesnât fear tax like Mama Ngozi.
Why?
Because he knows how to play the rules:
If he buys government bonds, itâs 100% tax-free.
If he invests in an agricultural company, he gets 5 years of zero tax.
If he earns dividends or rent from abroad and brings it through the bank, itâs tax-free.
Meanwhile, Mama Ngozi doesnât know. She just spends her money anyhow and shouts âgovernment is wicked.â
The truth?
The government actually gives you plenty of ways to escape tax, but only the rich know and use them.
Do you know How the Government Will Catch You?
Now let me open your eyes.
From 2026, the tax authorities will monitor businesses more closely through the banks.
Not that they will tax your balance - No.
But if Mama Ngozi is making âŚ10,000 profit every day (âŚ300,000 a month), and she never files tax, the bank record will expose her.
The poor man thinks âgovernment doesnât know my small money.â
But with technology, they will know.
Let me share with you the New Progressive Tax Band Again
This one is important.
First âŚ800,000 = 0% tax
Next âŚ2.2m = 15% tax
Next âŚ9m = 18% tax
Next âŚ13m = 21% tax
Next âŚ25m = 23% tax
Anything above âŚ50m = 25% tax
So if Mama Ngozi earns âŚ700,000 in a year, no tax.
But if Alhaji Musa earns âŚ60m, he must pay, whether he likes it or not.
But here's the Secret that Nobody Will Tell You
The government will never say this out loud, but let me tell you:
If you donât learn investment, tax will keep you poor.
The rich always shift their money into tax-free zones (government bonds, agriculture, pensions, foreign dividends).
Meanwhile, the poor keep money in the bank, and watch inflation + tax finish it.
Let me be fair.
The new law actually has a lot of benefits:
Rent relief: 20% of your rent (capped at âŚ500k) can reduce your taxable income.
Minimum wage earners are exempt.
Pensioners and retirees are safe.
Small businesses under âŚ50m turnover wonât pay tax.
So, itâs not all bad news.
My Advice to Mama Ngozi (and to You Reading this)
Donât fear tax. Understand it.
Donât hide income. plan it.
Donât just hustle. Use investment to reduce your tax burden legally.
Learn the game the rich are playing.
Because poverty is not only about lack of money.
Poverty is when you donât know the rules of the money game.
From 2026, ignorance will be very costly.
The poor will cry âgovernment is wicked.â
The rich will smile and say, âthank you for the tax holiday.â
Be wise.
Donât just hustle like Mama Ngozi.
Learn the rules, play the game, and build wealth that tax cannot destroy.
I am Iking Ferry
Financial Literacy Advocate.
Founder, Pulseford Business School
On a Mission To raise 1 million financially free Nigerians with the right knowledge.
Let me ask you this:
If tomorrow you start earning big money, will you pay blind tax like Mama Ngozi or smart tax like Alhaji Musa?
