The Federal Government has announced that low-income workers earning N100,000 or less per month will be exempt from paying personal income tax starting January 2026. The move, officials say, will benefit about one-third of Nigeria’s workforce and is aimed at creating a fairer tax system.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, told journalists in Lagos over the weekend that the exemption marks a shift away from what he called “taxing poverty.”
“These are Nigerians who are barely surviving, yet we still tax them,” Oyedele said. “Instead of taxing people who cannot meet their basic needs, we should be supporting them.”
The reforms also reduce the tax burden for middle-income earners, with individuals earning between N100,000 and N2 million per month paying lower taxes under the new system. According to Oyedele, this will increase disposable income without requiring salary increases.
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High-income earners, who make up roughly two per cent of workers, will see a slight increase in their tax share. Only those earning N120 million or more annually will face a top personal income tax rate of 25 per cent. Oyedele said the adjustment is targeted, intended to restore balance rather than penalise success.
The changes go beyond personal income tax. Corporate tax rates will drop from 30 per cent to 25 per cent, while small businesses with annual turnover under N100 million will pay no corporate tax. Oyedele said the measures aim to encourage business growth, formalisation, and investment.
He also criticised Nigeria’s multiple taxation system and the numerous tax-collecting agencies that have made compliance costly and confusing. The reforms will replace several outdated laws with a simpler, more transparent framework.
“Tackling inequality lies at the heart of the reform agenda,” Oyedele said. “These reforms are about fairness, inclusion, and growth. If we get the incentives right, businesses will grow, jobs will be created, and Nigeria will work better for everyone.”