Nigeria’s Fiscal Reforms announced that from January 1, 2026, new tax laws would come into effect, offering reliefs and exemptions to low-income earners, average taxpayers, and small businesses.
Officials said the changes were designed to ease the financial burden on citizens and encourage compliance with tax regulations.
Under the revised Personal Income Tax (PAYE) rules, four categories of Nigerians were identified as exempt from paying tax:
1. Individuals earning the national minimum wage or less were exempt.
2. Citizens with an annual gross income up to ₦1,200,000, which translated to about ₦800,000 taxable income, were exempt.
3. Those earning annual gross income up to ₦20 million would benefit from reduced PAYE tax.
4. Gifts were exempt from taxation.
Government’s position on tax relief
Authorities explained that the reforms were aimed at protecting vulnerable groups while ensuring fairness in the tax system. Officials noted that the exemptions would particularly benefit workers on minimum wage and small-scale earners.
Impact on Nigerians
Tax experts said the new law could improve disposable income for millions of Nigerians and reduce the pressure on households struggling with rising living costs. Analysts also suggested that the reduced PAYE rates for middle-income earners would encourage voluntary compliance and strengthen government revenue in the long term.
Nigeria fiscal reforms
Nigeria’s Fiscal Reforms, set to take effect from January 1, 2026, introduced a new framework aimed at easing the tax burden on citizens while strengthening compliance.
‘The reforms focused on personal income tax, offering exemptions and reliefs to low-income earners, average taxpayers, and small businesses. Under the new rules, individuals earning the national minimum wage or less were exempt from tax.
Similarly, those with an annual gross income up to ₦1,200,000, translating to about ₦800,000 taxable income, were also exempt. For middle-income earners, the law provided reduced PAYE rates for those earning up to ₦20 million annually. In addition, gifts were excluded from taxation.
Officials explained that the reforms were designed to promote fairness and equity in the system, ensuring that vulnerable groups were protected. Analysts suggested that the changes could boost disposable income, encourage voluntary compliance, and support economic growth by reducing pressure on households and businesses.
