Nigeria’s individual income tax framework operates on a progressive system, with tax rates that scale according to the taxpayer’s annual income. Below, you’ll find a clear breakdown of the tax brackets, applicable rates for 2025, and practical considerations for individuals and business professionals considering personal tax obligations in Nigeria.
Individual Income Tax Structure for Nigeria (2025)
Nigeria applies income tax on a progressive basis, meaning the tax rate increases as your income rises. The tax is assessed on total income. The table below provides an overview of all current brackets for 2025, with rates expressed in Nigerian Naira (₦ / NGN):
| Income Range (NGN) | Rate (%) |
|---|---|
| ₦0 – ₦300,000 | 7% |
| ₦300,001 – ₦600,000 | 11% |
| ₦600,001 – ₦1,100,000 | 15% |
| ₦1,100,001 – ₦1,600,000 | 19% |
| ₦1,600,001 – ₦3,200,000 | 21% |
| ₦3,200,001 and above | 24% |
Each portion of income falls into the corresponding bracket and is taxed at that bracket’s rate. For example, only income above ₦3,200,000 is taxed at the highest 24% rate. The starting threshold offers a relatively low initial tax liability, but progression is rapid as income increases.
Key Points for Taxpayers in Nigeria
- Type of tax system: Nigeria follows a progressive income tax structure with rates ranging between 7% and 24% in 2025.
- Assessment basis: Taxation is based on total income earned by an individual in a given tax year.
- Currency: All income declarations, calculations, and payments must be in Nigerian Naira (NGN).
- Surtaxes and additional levies: No general surtax or supplemental charge has been disclosed for individual income tax by Nigerian authorities in 2025.
- Duration of holding period: No minimum or maximum holding period is specified for income tax purposes based on current information.
Detailed Breakdown of the Nigerian Individual Income Tax Brackets
To illustrate the progressive nature of the framework, consider that an individual whose total income is ₦2,000,000 would pay:
- 7% on the first ₦300,000
- 11% on the next ₦300,000 (₦300,001 – ₦600,000)
- 15% on the next ₦500,000 (₦600,001 – ₦1,100,000)
- 19% on the next ₦500,000 (₦1,100,001 – ₦1,600,000)
- 21% on the subsequent ₦400,000 (₦1,600,001 – ₦2,000,000)
Only the amount exceeding each previous bracket is taxed at the higher rate. This structure is typical for progressive tax systems and can quickly increase effective tax rates as income rises.
Comparison: Nigerian Income Tax in Practice
For planning or evaluation purposes, converting the brackets to other currencies can be useful. As of early 2025, the exchange rate is approximately ₦1,300 to $1 USD. A summary conversion:
| Income Range (NGN) | Approx. Income Range (USD) | Rate (%) |
|---|---|---|
| ₦0 – ₦300,000 | $0 – $231 | 7% |
| ₦300,001 – ₦600,000 | $231 – $462 | 11% |
| ₦600,001 – ₦1,100,000 | $462 – $846 | 15% |
| ₦1,100,001 – ₦1,600,000 | $846 – $1,231 | 19% |
| ₦1,600,001 – ₦3,200,000 | $1,231 – $2,462 | 21% |
| ₦3,200,001 and above | $2,462+ | 24% |
(USD conversion calculated at ₦1,300 = $1 USD for early 2025)
Pro Tips for Managing Your Individual Income Tax in Nigeria
- Be meticulous in tracking all sources of income throughout the year, as every Naira counts towards the progressive brackets.
- Review annual changes to personal income tax rates and brackets, as thresholds may be adjusted and new regulations may apply at the start of each tax year.
- Use the official Federal Inland Revenue Service (FIRS) portal (firs.gov.ng) to verify updated information and access filing resources.
- If you have income in foreign currency, ensure timely conversion into NGN for accurate reporting and compliance with local regulations.
Key Takeaways on Nigeria’s Individual Income Taxes
Nigeria utilizes a straightforward progressive system for individual income tax, with clear brackets and escalating rates as income increases. No general surtaxes or holding period requirements are imposed under the 2025 framework. For professionals and business owners, remaining aware of income sources and tracking earnings against the tax brackets is essential to maintain compliance and plan effectively. Always refer to the official Federal Inland Revenue Service for the latest updates and policy clarifications.