Nigerian students who earn money from side jobs or small businesses are considered income earners for tax purposes once that income arises from work or commercial activity, even if they remain in school.
This is for students who receive regular pocket money from parents but also earn money occasionally from tutoring, freelancing, online sales or digital services, a growing reality as young Nigerians seek extra income amid rising living costs.
“If you do something else, you are no longer just a student in that sense,” said Olufemi Olarinde, head of Fiscal and Tax Reforms Implementation Division at the Nigerian Revenue Service, responding to a question during a BusinessDay Talk Exchange. “Once you earn income, the income will be chargeable to tax.”
Olarinde explained that the tax system does not recognise “student income” as a special category. Rather, it distinguishes between money received as support and money earned through effort or business.
Pocket money from parents or guardians does not qualify as income, but earnings from paid activities do.
“Everyone who earns an income is chargeable to tax, except the law exempts such income,” he said. “The law may exempt some income or profit, but generally speaking, once there is income, you are chargeable to tax.”
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Under Nigeria’s personal income tax framework, individuals earning up to N800,000 annually fall within an exempt band and do not pay tax on that income. Higher earnings are taxed progressively, while certain profits and income streams are also exempted by law.
These exemptions, however, apply to the income itself, not to the individual’s identity.
Student status does not shield income earned outside academic activity. When students introduce themselves as having multiple roles, for example, student and freelancer, each role is treated separately for tax purposes.
“If you say, ‘I am a student and a data analyst,’ that aspect of you being a data analyst is chargeable to tax,” Olarinde said. “When you are doing that business, you are not doing it as a student; you are doing it as a business person.”
This interpretation also applies to casual or occasional income, which many students assume falls outside the tax system. Income earned irregularly from gigs, short-term jobs or one-off services still qualifies as income, even if it is not consistent.
Tax professionals say this is one of the most common misconceptions among students and young people that only full-time employment attracts tax, or that informal earnings are automatically excluded.
In practice, all income earned within a year is assessed together, with exemptions applied afterwards.
Nigeria’s informal sector, where most student side hustles operate, accounts for over 93 percent of total employment as of 2024, according to the National Bureau of Statistics. As more students turn to informal work to supplement allowances, questions around compliance are becoming more frequent.
Another area of confusion relates to registration. A Tax ID is legally required for anyone earning income or operating a business in Nigeria. For individuals, registration is handled by state tax authorities.
While earning income does not automatically mean tax is payable, registration brings individuals into the tax system and enables income to be properly assessed. Students running small businesses or earning consistently from side jobs are expected to obtain a TIN and file annual returns.
Tax is paid on income or profit, not on mere activity. Where earnings fall within exempt thresholds, no tax is payable, but income must still be declared.
Annual personal income tax returns for the preceding year are required to be filed with the relevant tax authority by March 31 of the current year, regardless of whether tax is due.
As student entrepreneurship becomes more common, understanding the boundary between pocket money and earned income is critical. Being a student defines one’s academic role, but once income is earned outside that role, tax obligations are determined by the nature of the activity.
