By Joke Kujenya
MAJOR CHANGES to Nigeria’s tax structure are expected from January 2026 as the Presidential Committee on Fiscal Policy and Tax Reforms confirmed that about 98 percent of Nigerians would either be exempted from the Pay-As-You-Earn (PAYE) tax or have their rates reduced to the lowest minimum.
Chairman of the Committee, Mr. Taiwo Oyedele, disclosed this during a session at the 31st Nigerian Economic Summit in Abuja, explaining that the new tax framework would ensure a fairer and more efficient system that protects low-income earners while requiring wealthier individuals to contribute more.
According to Oyedele, the reforms were designed to reduce the tax burden on ordinary Nigerians while strengthening revenue administration and accountability at all levels of government.
He stated that under the proposed structure, poor Nigerians would not pay personal income tax, while higher earners would bear a proportionally larger responsibility.
“The poor will not pay personal income tax. Those who earn more and have greater means will pay more. That is how fairness works in a modern economy,” Oyedele said.
He noted that the revised PAYE framework would remove millions of workers from the tax net entirely, adding that the system was developed after an analysis of household income levels across the country.
The Committee’s findings, based on data from the National Bureau of Statistics (NBS), established an average household size of five people, with two gainfully employed.
Using that data, the Committee set the poverty threshold at an estimated ₦200,000 per household per month, which translates to about N100,000 per employed person.
Oyedele explained that those earning below this amount would be exempted from PAYE. “Under the old laws, someone earning thirty thousand naira a month was paying tax.
That will no longer happen under the new structure. This is a significant improvement and a better deal for the poor,” he stated.
He said the remaining two per cent of the workforce, representing high-income earners, would pay higher taxes.
“They are our rich people that we can find,” he added, stressing that the reforms would help narrow inequality and promote social fairness.
Beyond individual income tax adjustments, Oyedele said small and low-income businesses would also enjoy exemptions to support enterprise growth and job creation.
“We are considering tax-exempt stickers for nano businesses to protect them from harassment by state and local government officials.
“These are the smallest operators, street vendors, petty traders, artisans—they should be allowed to thrive,” he explained.
Oyedele said the Committee’s work reflected President Bola Tinubu’s fiscal policy agenda, which seeks to enhance Nigeria’s sovereign credit rating, lower borrowing costs for both government and private businesses, and stimulate investment across key sectors.
He acknowledged that implementing the reforms had not been without challenges, noting that he had faced personal threats because of his role.
“Reform is tough. I have suffered all kinds of things, including death threats. But I am not scared. The reforms belong to Nigerians. They don’t belong to Mr President,” he stated.
He highlighted that one of the key goals of the new law was to incentivise formalisation by addressing inconsistencies between personal and corporate tax rates.
“In many countries, top rates for personal income tax are higher than for corporate tax to encourage people to operate formally. But in Nigeria, the reverse is the case,” he said.
According to him, the reforms will lower the corporate tax rate from 30 per cent to 25 percent while capping the highest personal income tax rate at 25 per cent.
“We are also introducing a zero per cent corporate tax rate for small companies with annual turnover below N100 million,” Oyedele disclosed.
He emphasised that the reforms were also aimed at addressing tax evasion and improving compliance across sectors. “When people evade tax, they undermine equity and accountability.
“Not addressing it incentivises illegality, and it hits back at us. Beyond generating revenue, we must fix that problem,” he said.
Responding to concerns about the possible impact on state revenues, Oyedele explained that members of the Joint Tax Board, representing all 36 states and the Federal Capital Territory, were involved in the Committee’s deliberations and supported the new framework.
“The states will not do worse; they will earn more from the Federation Account without burdening vulnerable citizens,” he assured.
He cited the N2.2 trillion shared recently by the Federation Account Allocation Committee (FAAC) as evidence that the reforms were already strengthening fiscal capacity.
He also confirmed that the Committee had submitted ten amendment proposals to the National Assembly to update outdated and regressive tax provisions, such as the “wheelbarrow tax.”
According to him, fiscal discipline and efficient expenditure remain key to ensuring citizens benefit fully from their taxes.
“We are working seriously on fiscal regimes to ensure transparency and prudence in government expenditure so that Nigerians get full benefits of their taxes,” he said.
Oyedele reaffirmed the Committee’s determination to build a tax system that is fair, transparent, and growth-driven, ensuring that citizens no longer face unfair taxation while the nation’s development goals are sustained through efficient revenue use.
