Nigeria’s new tax law has introduced a major change that is already stirring confusion across offices, markets, and online spaces: mandatory annual tax returns for individuals, including low-income earners.

Since the law took effect in 2026, many Nigerians have been asking the same questions. If tax is already deducted from salary, why file again? Do small traders earning below ₦800,000 a year need to bother? And what happens if someone ignores it completely?

Experts say understanding the new requirements early could save Nigerians money, stress, and penalties.

What Is a Tax Return?

A tax return is a yearly declaration of income to the government. It shows how much money a person earned from salary, business, freelance work, rent, or other sources, and what deductions or reliefs apply.

Under the Nigeria Tax Administration Act, filing a return allows tax authorities to confirm whether a person has paid the correct tax, owes additional tax, or qualifies for a refund.

Who Must File Under the New Law?

Under the new framework, every individual with income must file a tax return, even if no tax is ultimately payable.

This includes:

• Salary earners under PAYE
• Freelancers and gig workers
• Small traders and artisans
• Business owners
• Landlords earning rental income

Employers are still required to file PAYE returns for staff by January 31 each year. However, individuals must file their personal tax returns by March 31, regardless of income level.

What About Low-Income Earners?

One key relief under the new tax law is that Nigerians earning ₦800,000 or less annually are exempt from paying personal income tax.

However, experts stress that such individuals must still file a nil return to confirm their exempt status. Failure to do so may result in being classified as non-compliant, which can create problems later when tax clearance is required.

Benefits Many Nigerians Are Missing

Tax experts say filing returns is not just about compliance; it also unlocks benefits.

Rent relief now allows individuals to deduct 20% of annual rent paid from taxable income, provided proper documentation is submitted. This can reduce the amount of tax deducted from salaries or even result in refunds.

Filing also enables access to a Tax Clearance Certificate, which is often required for:

• Bank loans
• Business registrations
• Government contracts
• Visa and official applications

For freelancers and workers with multiple income streams, filing accurately can prevent future disputes and audits.

Penalties Have Increased

The law also introduces stiffer penalties for non-compliance.

Missing the March 31 deadline attracts a ₦100,000 fine for the first month, followed by ₦50,000 for every additional month of delay. Under-declaring income can also lead to interest charges, audits, and enforcement actions.

With improved digital monitoring, including BVN-linked financial data and electronic invoicing, tax authorities now have stronger tools to detect undeclared income.

Challenges on the Ground

Despite the reforms, many Nigerians face real obstacles. Limited internet access, lack of digital skills, missing rent receipts, and difficulty obtaining a Tax Identification Number remain common problems.

Experts argue that tax authorities must increase public awareness, deploy help desks in markets and local councils, and simplify filing processes to ensure inclusion.

What Nigerians Should Do Now

Tax professionals advise Nigerians to start early. Gather payslips, rent documents, and records of side income. Visit state internal revenue portals or the Nigeria Revenue Service platform for guidance.

Those unsure of the process are encouraged to seek help from tax offices or licensed practitioners rather than waiting until deadlines approach.

A Shift Nigerians Must Adapt To

While concerns remain about how tax revenues are used, analysts say the new tax law reflects a shift toward broader compliance rather than higher tax rates.

Understanding and filing tax returns, they say, is no longer optional. It is now a key requirement for financial stability, access to opportunities, and long-term peace of mind.

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