FAAC: Three Tiers of Government Share ₦2.550 Trillion as June 2026 Revenue; States and LGAs Receive Over ₦1.36 Trillion The Federation Account Allocation Committee (FAAC) has distributed a total of ₦2.551 trillion as Federation Account revenue for June 2026 to the Federal Government, the 36 state governments, and the 774 Local Government Councils across Nigeria. The allocation was approved during the FAAC meeting held in July 2026 in Abuja and chaired by the Honourable Minister of Finance and Coordinating Minister of the Economy. The meeting was attended by the Accountant-General of the Federation, State Commissioners of Finance, and other members of the committee. ( FMINFO ) Breakdown of the Revenue Distribution The total distributable revenue of ₦2.551 trillion comprised: ₦1.810 trillion from Statutory Revenue. ₦740.724 billion from Value Added Tax (VAT). ( FMINFO ) Statutory Revenue Allocation From the statutory revenue: Federal Government: ₦849.366 billion State Govern...
What Nigeria’s New Tax Law Really Means for Your Income and Business in 2026
New Tax Law Explained
On January 1, 2026, Nigeria will begin enforcing a major overhaul of its tax system — the most extensive reform in decades. Signed into law in June 2025, these changes are aimed at simplifying the tax code, expanding the tax base, modernizing administration, and aligning Nigeria with global norms. (Business Post Nigeria)
Below is a clear breakdown of what it means for workers, small businesses, medium and large firms, and everyday Nigerians.
🧾 1. Big Picture: What’s Changing in 2026
Nigeria’s tax reform consolidates several older laws (like the Personal Income Tax Act, VAT Act, Capital Gains Tax Act) into one modern tax framework — the Nigeria Tax Act (NTA) 2025. It also introduces the Nigeria Revenue Service (NRS) to replace the Federal Inland Revenue Service (FIRS) as the main tax collector with stronger digital enforcement and broader powers. (Tax News)
Key aims:
Simplify tax rules.
Broaden the tax base to include digital and foreign income.
Use technology for compliance (e-filing, e-invoicing).
Bring more fairness and transparency.
👩💼 2. Personal Income Tax — What Workers Should Know
💰 New Progressive Tax Brackets (2026)
Under the new system, how much tax you pay depends more clearly on how much you earn:
| Annual Income (₦) | Tax Rate (%) |
|---|---|
| 0–800,000 | 0% |
| 800,001–3,000,000 | 15% |
| 3,000,001–12,000,000 | 18% |
| 12,000,001–25,000,000 | 21% |
| 25,000,001–50,000,000 | 23% |
| Above 50,000,000 | 25% |
👍 Relief for Low Earners
Income ≤ ₦800,000 won’t pay personal income tax at all — a major relief for minimum-wage earners and many middle-income workers. (Mercans Global Payroll & PEO)
🏠 Rent Relief Replaces Old Allowances
The outdated Consolidated Relief Allowance (CRA) has been abolished and replaced with a rent relief that’s the lower of ₦500,000 or 20% of annual rent paid. This can affect your taxable income compared with the old system. (Mercans Global Payroll & PEO)
📌 Important Notes
Some earlier social media claims (like a flat 20% tax for everyone earning above ₦800,000) are false or misleading. The new rates are progressive, not flat. (Africa Check)
🏢 3. Corporate & Business Taxes — What Companies Pay
📉 Corporate Income Tax (CIT)
Large businesses’ CIT is now 25% (down from 30%), making Nigeria more competitive with peers. (Newspeakonline)
👶 Small Business Exemptions
Small companies with turnover ≤ ₦100m and fixed assets ≤ ₦250m are exempt from CIT, Capital Gains Tax, and the new Development Levy — a huge break for SMEs. (deutschepartners.com)
📈 New Development Levy
A 4% levy on assessable profits replaces older levies like the Tertiary Education Tax and IT levy, reducing administrative hassles. (Baker Tilly Nigeria)
🌍 Global Minimum Tax
Very large companies and multinationals now face a 15% minimum effective tax rate, ensuring profits earned in Nigeria or shifted abroad are taxed fairly. (excellium.biz)
📊 Capital Gains Tax
Companies now pay 30% on capital gains — a tightening compared with the old regime. (Baker Tilly Nigeria)
🛠️ 4. Compliance & Administration — The New Rules
📑 Mandatory Tax IDs & Filing
Individuals and businesses now must register for a Tax Identification Number (TIN) and file returns — even if you previously didn’t. (Polity.org.za)
💻 Digital Compliance
E-filing and e-invoicing are now required, especially for VAT, which remains at 7.5%. (Baker Tilly Nigeria)
📊 Broader Tax Net
Income from digital platforms, remote work, foreign contracts, and digital assets (e.g., crypto gains) can be taxed if connected to Nigeria. (Newspeakonline)
🤔 5. What It Means for You (Practical Impact)
🧑💼 Employees
Many low and middle-income earners will see reduced tax bills compared with old PAYE rules.
Higher earners with rising incomes might ultimately pay more — but in clearer, progressive steps.
👩💻 Entrepreneurs & SMEs
Startups, microbusinesses, and small firms are better protected with exemptions that free capital for growth.
Better VAT recovery and digital compliance can improve cash flow and record-keeping.
🏢 Large Businesses
Lower headline CIT and unified levies help competitiveness.
More nuanced tax rules (global minimum, capital gains changes) require strong tax planning.
💡 General Public
The reform seeks fairness and modernization, but requires everyone to understand and comply — ignoring new filing and reporting rules now could lead to penalties later.
📝 Bottom Line
Nigeria’s 2026 tax overhaul is not simply a new set of numbers, but a restructuring of the tax system itself — one designed to:
Protect low earners,
Encourage small business growth,
Modernize tax administration,
And close loopholes that previously weakened revenue collection. (Tax News)
The impact will vary by income level, business size, and industry. Staying compliant — especially by registering for a TIN, keeping records, and understanding new reliefs — will help you keep more of your income and legally minimize tax costs.
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