By John Umeh
In a major policy shift aimed at easing the financial burden on Nigerians, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Dr. Taiwo Oyedele, has announced that an estimated 98 percent of Nigerians will either be completely exempted from paying taxes or experience a drastic reduction in their Pay-As-You-Earn (PAYE) rates when the new tax law takes effect in January 2026.
Oyedele made the revelation during a session at the Nigerian Economic Summit held in Abuja, where he clarified key aspects of the government’s upcoming fiscal reform agenda. The announcement drew loud applause from participants, many of whom had expressed concerns about rising living costs and the increasing economic strain on citizens.
According to Oyedele, about 33 percent of Nigeria’s working population — drawn from both public and private sectors — will fall into the category of full tax exemption, while another 65 percent will pay substantially lower taxes under the revised system. Only about two percent, representing the country’s high-income earners, will face higher tax obligations.
“They are the wealthy individuals we can easily identify,” Oyedele said, stressing that the goal is to ensure a fair and progressive tax system. “You cannot tax people in poverty and expect to build a wealthy nation. It’s a contradiction.”
Explaining how the poverty and middle-class thresholds were determined, Oyedele said the committee used data from the National Bureau of Statistics (NBS) to define income levels based on average household size and earning capacity. He noted that a typical Nigerian household consists of five members, with two being gainfully employed.
“We concluded that for two people to adequately cater for a family of five without falling below the poverty line, they need to earn between ₦100,000 and ₦120,000 monthly each — about ₦200,000 per household,” he explained. “Under the new law, such households will pay zero tax. This is a huge improvement from the current system where even those earning ₦30,000 a month are taxed.”
The reform also includes major adjustments for businesses. Oyedele disclosed that under the new framework, small companies with an annual turnover of ₦100 million or less will enjoy a zero percent corporate tax rate, a move designed to promote formalization and ease of doing business.
Currently, individuals operating informally face lower tax rates than registered businesses, which pay as much as 40 percent combined in taxes — a situation Oyedele described as “a disincentive to formalization.” The new law aims to correct that imbalance by reducing corporate tax from 30 percent to 25 percent and setting a more equitable structure for individuals.
“Globally, the top personal income tax rate is usually higher than corporate tax to encourage people to formalize their businesses,” Oyedele said. “In Nigeria, we are reversing that pattern to support small businesses and promote growth.”
He, however, acknowledged that the reforms have raised concerns among state governments over possible revenue shortfalls. “One governor told us, ‘You’ve exempted everyone who pays tax in my state,’” he recounted, noting that the committee is working with the states to balance fiscal needs with social equity.
Oyedele also lamented that he has faced death threats over the ongoing tax reforms but maintained that the committee remains committed to fairness and transparency. “This system will be no respecter of persons. Anyone who earns income must pay the appropriate tax — no more, no less,” he asserted.
The new tax regime, he added, is not just about increasing revenue but about creating a fair, growth-driven fiscal structure that supports low-income earners, encourages formal business operations, and strengthens the overall economy.
With implementation set for January 2026, experts say the reform could mark one of Nigeria’s most significant tax overhauls in decades — one designed to protect the poor, empower small businesses, and ensure that the wealthy contribute their fair share.
