Will Tax Be Automatically Deducted from Bank Accounts in 2026?

Will Tax Be Automatically Deducted from Bank Accounts from 2026? As the implementation of the new Finance and Tax Reform Laws kicked off on 1 January 2026, one fear has dominated public conversations:

“From 2026, the government will start automatically deducting tax from bank accounts.”

This claim has caused widespread anxiety among individuals and business owners. However, a careful reading of the law shows that automatic tax deduction from bank accounts is not authorised under the new tax regime.

This article addresses that concern directly — using the law itself.

Short Answer: No, Tax Will NOT Be Automatically Deducted from Bank Accounts

There is no provision in the Nigeria Tax Act, 2025, Nigeria Tax Administration Act (NTAA), 2025, Personal Income Tax Act (PITA) Or any related regulation that authorises the automatic deduction of tax from bank accounts simply because a person has income or does not have a Tax ID.

Tax collection in Nigeria remains assessment-based, not account-sweeping.

Why This Fear Exists

The confusion arises from new and existing provisions that require Tax Identification Numbers (TIN or Tax ID) for certain banking and financial transactions.

These provisions have been wrongly interpreted to mean:

• Banks will deduct tax directly from accounts

• Accounts will be monitored and debited automatically

• January 2026 marks the start of “direct tax deductions”

None of these interpretations are supported by the law.

What the Law Actually Says

1. Tax ID Is for Identification — Not Deduction

Under Section 8(2) and Section 147 of the Nigeria Tax Administration Act, 2025, banks and financial institutions are required to ensure that taxable persons provide a Tax ID when engaging in income-related or business banking activities.

The purpose is clearly stated:

• Identification

• Data harmonisation

• Ease of tax administration

There is no mention of automatic debit, direct deduction, or account sweeping.

2. This Requirement Is Not New

The same principle already exists under Section 54(1) of the Personal Income Tax Act (PITA), which has been in force since January 2020.

Despite this provision being in effect for years:

• Banks have not deducted tax automatically

• Personal accounts have not been swept

• Nigerians have not experienced mass debiting

The 2026 reforms do not change this position.

See Also: Capital Gains Tax in Nigeria Is Changing, Here’s What It Really Means for You

How Tax Is Still Collected Under Nigerian Law

Even under the new tax framework, tax collection follows due process, which includes:

1. Identification of taxable income

2. Issuance of an assessment

3. Service of notice to the taxpayer

4. Opportunity to object or appeal

5. Enforcement only after legal thresholds are met

Automatic deduction from bank accounts bypasses all of these steps, and the law does not permit that.

What the Law Does NOT Allow

To be clear, the new tax laws do not authorise:

• Automatic debiting of personal or business accounts

• Real-time tax deductions by banks

• Freezing accounts solely for tax reasons

• Deducting tax without assessment or notice

Any such action would require explicit statutory authority, which does not exist.

What This Means in Practice

For Individuals

• Your personal bank account will not be automatically debited for tax in 2026

• Salary earners under PAYE remain taxed at source by employers, not banks

• No law empowers banks to deduct income tax directly from you

For Businesses

• Having a Tax ID is about proper identification, not automatic deductions

• Taxes remain payable through normal filing and remittance processes

• Compliance is required, but enforcement is not automated debiting

Bottom Line

The claim that tax will be automatically deducted from bank accounts from January 2026 is false.

Nigeria’s tax reforms focus on:

• Better administration

• Improved compliance

• Data coordination

They do not introduce automatic tax deductions from bank accounts.