There’s a lot of confusion around how the upcoming tax reforms will impact individuals and businesses starting January 2026. Will your bank account be taxed? Will your employer handle your taxes? Let’s break it down clearly.
1. If I earn below ₦800,000 a year, do I still need to file a tax return?
Yes — everyone who earns an income is required by law to file a tax return, no matter how little they make.
According to Section 29 of the Tax Act:
“Where the income of a person cannot be properly assessed or records are not properly kept, such a person shall be taxed under a presumptive tax regime as prescribed by the Minister.”
In plain English, this means even if you earn less than ₦800,000 or qualify for a tax exemption, you still need to file your return and keep basic records. If you don’t, the tax authorities can estimate and charge taxes on your behalf under a presumptive tax rule.
2. Will my employer handle my tax filing?
Not entirely — you’ll need to take more responsibility yourself.
Under the current system, a flat 20% payroll deduction is automatically taken out for tax. But the new reforms change that. Deductions will now depend on your personal contributions — things like your pension (Retirement Savings Account), life insurance, National Housing Fund, and health insurance.
To claim these deductions and get the full benefit, you must file your own individual tax return, even if your employer also submits a return for you.
3. What if my income comes from “immoral” or illegal activities? Do I still pay tax?
Surprisingly, yes. The taxman isn’t concerned with whether your source of income is moral or not — as long as it’s income, it’s taxable.
A classic example is Al Capone, the infamous American gangster who was convicted in 1931 for tax evasion — not for his criminal activities, but for failing to pay taxes on them.
Even the U.S. Internal Revenue Service (IRS) clearly states in its publication:
“If you receive a bribe, include it in your income.”
So, regardless of how you earn, the government expects its share.
4. Will my bank balance or transfers be taxed?
No, not directly. Simply having money in your bank account or making transfers doesn’t trigger a tax. What’s taxed is your income — specifically, your net profit and any interest earned on your deposits.
In other words, your capital or turnover isn’t taxed, but your earnings and investment returns are.