…Revised revenue-sharing formula allocates 55% to states, 35% to local governments
Low-income earners earning N800,000 or less annually will pay no Personal Income Tax under Nigeria’s 2025 tax reforms, the Nigeria Revenue Service (NRS), has said.
The disclosure was made by Danjuma Manga, Regional Administrator of the NRS, in Gombe at the 2026 Symposium of the Forum of Heads of Federal Ministries, Departments and Agencies with the theme: “Aligning Federal, State and Local Government Priorities for Sustainable National Development.
According to Manga, the reforms are designed to promote fairness in the tax system, improve compliance, harmonise tax administration and strengthen the revenue base of the three tiers of government.
He explained that the new framework exempts individuals earning N800,000 or less annually from personal income tax, adding that eligible reliefs and deductions could further reduce the taxable income of qualifying workers.
Manga, who also serves as State Monitor for Adamawa, Gombe and Taraba States, said individuals earning the national minimum wage of N70,000 monthly or less are also exempted from personal income tax under the provisions.
“Tax payment is the responsibility of all citizens, as provided under Section 24, subsection four of the Nigerian Constitution. However, you only pay tax when you earn income, make a profit or dispose of an asset and realise a gain,” he said.
He added that the reforms are intended to protect low-income earners from excessive tax burdens while encouraging economic activity and improving compliance.
Manga said the changes were anchored on four pieces of legislation that have restructured the country’s tax system, particularly in the areas of tax policy, legislation and administration.
Effective implementation, he noted, will require coordination among the federal, state and local government institutions responsible for tax collection and administration.
He identified the NRS, State Internal Revenue Services and Local Government Revenue Committees as the principal institutions responsible for administering taxes across the federation.
He said the reforms also seek to establish uniform administrative and compliance procedures across the three tiers of government to improve efficiency and reduce inconsistencies.
Beyond personal income tax, Manga said the reforms introduce changes to the distribution of federally-collected revenue, with the Federal Government ceding five percentage points of its share to state governments.
Under the revised formula he outlined:
Federal Government: 10%; State Governments: 55% and Local Governments 35%
He said allocations to States would be distributed using criteria including equality, population and Internally-Generated Revenue (IGR), with adjustments to the weight assigned to the different factors.
The changes, he added, are intended to provide states with additional resources for development while rewarding improvements in revenue generation and tax compliance.
Manga noted that State and Local Governments remain heavily dependent on federally collected revenue, including Value-Added Tax and other taxes distributed among the three tiers.
He urged federal agencies and other institutions responsible for deducting taxes at source to ensure that deductions from contractors’ payments and other taxable transactions are remitted promptly, to improve revenue collection, strengthen public finances and support the delivery of development projects across the country.
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