If you design, write, code, edit videos, manage social media or sell any other service as a freelancer in Nigeria, the tax reforms that took effect in 2026 apply to you. Many freelancers have never filed a tax return because nobody deducts PAYE from their income. That is changing: banks are now expected to ask taxable people for a tax ID, and the new laws make registration a clear legal duty. This guide explains, in plain language, how freelancer income is taxed under the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, and what to do step by step.
The two laws you need to know
- The Nigeria Tax Act 2025 (NTA) sets out what is taxed and at what rates, including personal income tax bands.
- The Nigeria Tax Administration Act 2025 (NTAA) sets out how tax is administered: registration, tax IDs, returns, records and penalties.
Both took effect from 1 January 2026. A consolidated copy of the administration law is hosted by the Tax Appeal Tribunal (NTAA 2025 PDF).
Step 1: Register and get a tax ID
Section 4 of the NTAA says every taxable person must register with the relevant tax authority and obtain a Taxpayer Identification (“Tax ID”). If you earn money from freelance work, you are carrying on a trade or business, so this applies to you whether your clients are in Nigeria or abroad.
For individuals, the National Identification Number (NIN) is used as the tax ID, and existing TINs remain valid. You can check or retrieve your tax ID on the official Nigerian Tax ID portal run by the Nigeria Revenue Service and the Joint Revenue Board. Registration is free. Be wary of anyone charging you to “register your TIN”.
Step 2: Understand which authority taxes you
As an individual freelancer, your personal income tax is generally administered by the Internal Revenue Service of the state where you are resident, for example LIRS in Lagos. Federal bodies such as the Nigeria Revenue Service deal with companies and some other taxes. If you register a limited company for your freelance business, the company’s tax is a separate matter.
Step 3: Work out your taxable income
Freelancers are taxed on profit, not on everything clients pay. In simple terms:
- Add up gross income for the year: all client payments, converted to naira at the rate you actually received or a reasonable documented rate.
- Subtract allowable business expenses: costs incurred wholly and exclusively to earn that income. For freelancers this often includes internet data, software subscriptions, a share of electricity or fuel for work, platform fees, equipment depreciation and coworking space.
- Subtract personal reliefs and eligible deductions that apply to you, such as voluntary pension contributions under the Pension Reform Act, NHF contributions, life insurance premiums and rent relief (20% of annual rent paid, capped at ₦500,000).
- The result is your chargeable income.
Keep receipts and bank statements for every expense you claim. A clean record is what makes a deduction stand up if your state tax office asks questions.
Step 4: Apply the personal income tax bands
The same bands apply to freelancers as to salaried workers (PwC Tax Summaries):
| Annual chargeable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 | 15% |
| Next ₦9,000,000 | 18% |
| Next ₦13,000,000 | 21% |
| Next ₦25,000,000 | 23% |
| Above ₦50,000,000 | 25% |
Illustration (invented figures)
A freelance designer receives ₦4,800,000 in the year and has ₦600,000 of documented business expenses. She pays ₦900,000 rent a year, so rent relief is ₦180,000.
| Gross income | ₦4,800,000 |
| Less business expenses | −₦600,000 |
| Less rent relief | −₦180,000 |
| Chargeable income | ₦4,020,000 |
| First ₦800,000 at 0% | ₦0 |
| Next ₦2,200,000 at 15% | ₦330,000 |
| Remaining ₦1,020,000 at 18% | ₦183,600 |
| Annual tax | ₦513,600 |
That is roughly 10.7% of her gross receipts. A freelancer whose chargeable income is ₦800,000 or less would owe no personal income tax, but should still register.
Step 5: File and pay through self-assessment
Because no employer runs PAYE for you, you file a self-assessment return with your state tax authority and pay the tax due. Many states let you register, file and pay online. Check your state IRS website for the exact annual filing deadline and accepted payment channels, since procedures vary by state.
What about the “small company” exemption?
You may have heard that small businesses pay no tax under the new law. That refers to companies. The NTA defines a small company as one with gross turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million, and exempts it from company income tax (Deloitte summary). Baker Tilly notes that small companies are also relieved of capital gains tax and the development levy (Baker Tilly).
If you operate as an individual (sole proprietor or business name), you pay personal income tax on your profits, not company income tax, so the 0% company rate does not automatically apply to you. Some established freelancers incorporate a company for this and other reasons, but incorporation brings its own filing duties and costs. Speak to an accountant before deciding.
Penalties for not registering
A summary by Pryme of section 100 of the NTAA reports a penalty of ₦50,000 for the first month of failing to register and ₦25,000 for each further month (Pryme). Confirm the current penalty with your state IRS or the law itself, but the message is clear: registering is cheaper than ignoring it.
Record-keeping system for freelancers
- Separate account: receive all client payments into one account you use only for business.
- Invoice log: invoice number, client, date, amount in original currency and naira received.
- Expense log: date, vendor, amount, what it was for, and a photo of the receipt.
- Tax set-aside: move a fixed share of every payment (many freelancers use 10–15%) into a separate savings pot so the tax bill is not a shock.
A spreadsheet is enough. The Nigerian Salary Budget Planner can be adapted, with an income tab for invoices and an expense tab for business costs. If your income varies month to month, read our guide to side hustles for salary earners, which covers managing irregular income.
Salary earner with freelance side income?
Your employer only taxes your salary. Freelance income on top is still taxable, and your total income determines which bands apply. In principle, you should declare the side income through self-assessment. Ask your state IRS how it handles people with both PAYE and self-employment income.
Frequently asked questions
I get paid by foreign clients in dollars. Is that taxable in Nigeria?
If you live in Nigeria and do the work here, that income is generally taxable in Nigeria. Convert it to naira using documented rates and keep the records. If tax was withheld abroad, ask a tax professional about relief.
Do I need to charge VAT?
Many small freelancers fall under small business thresholds, but VAT rules have their own definitions. Check with the Nigeria Revenue Service or an accountant before adding VAT to invoices.
My income is below ₦800,000 a year. Should I bother?
Yes, register. You may owe no tax, but a tax ID is increasingly required by banks, and filing builds a record that helps when you apply for loans or visas.
Can I deduct my laptop?
Equipment used for business is generally recovered through capital allowances spread over its useful life rather than deducted all at once. An accountant can apply the right method.
Where do I pay?
Personal income tax is paid to your state of residence through the channels listed on the state IRS website. Always get an official receipt or electronic acknowledgement.
This guide is general information based on the sources linked above and is not tax advice. The 2025 tax laws are new and their interpretation is still developing. Confirm your obligations with your state Internal Revenue Service or a qualified tax professional.
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