The Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele has revealed that the new tax laws would significantly reduce the tax burden on low and middle-income earners while promoting economic growth and business formalisation.
The four new tax laws, the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service Act (NRSA), and Joint Revenue Board Act (JRBA) represent a comprehensive overhaul of Nigeria’s fiscal landscape.
The reforms aim to increase government revenue, enhance transparency, and improve the ease of doing business across all levels of government.
Speaking at the ongoing 31st Nigerian Economic Summit (NES31) in Abuja, Oyedele noted that Nigerians will begin to experience the benefits of the newly enacted tax laws from January 2026.
This is as 98 per cent of workers are projected to be exempted from paying the Pay As You Earn (PAYE) tax.
“From January 2026, you will feel the impact,” Oyedele said. “If you earn a salary, when you are paid at the end of January 2026, for 97 to 98 per cent of Nigerians, they will either no longer pay PAYE, or they’ll pay less. That means about one-third of workers in both the public and private sectors will be exempted entirely. The remaining two per cent plus will pay more.”
Explaining the basis for the new policy, Oyedele said the committee established a poverty line benchmark based on household income rather than individual earnings.
“The average household size in Nigeria is five, with about two people gainfully employed. We determined that a household income of between ₦100,000 and ₦120,000 per month would prevent families from falling below the poverty line,” he said.
“Under the old tax laws, anyone earning ₦30,000 a month was already paying tax. This new framework represents a major shift towards fairness and inclusivity,” he added.
Oyedele also highlighted several business-friendly provisions in the reforms, including a reduction in corporate income tax from 30 per cent to 25 per cent, and a complete exemption for small companies with an annual turnover of ₦100 million or less.
“Low income, no tax; upper income, a bit more,” he said. “The law reduces personal income tax rates to 25 per cent and aligns Nigeria with global best practices where personal tax rates are slightly higher than corporate rates to encourage business formalisation.”
He explained that the reforms were designed to remove the disincentives that have historically discouraged informal businesses from becoming formal.
“When an informal operator pays taxes, their effective rate rarely exceeds 20 per cent. Once they formalize, it could jump to over 40 per cent. We are correcting that imbalance,” he said.
According to Oyedele, the overall goal of the reforms is to create a simpler, fairer, and more transparent tax system that encourages investment, reduces poverty, and strengthens Nigeria’s fiscal stability.