The Federal Government of Nigeria has unveiled sweeping tax reforms that will exempt workers earning N100,000 or less per month from personal income tax starting January 2026, a move described by officials as a bold step to halt the practice of “taxing poverty” amid the ongoing cost-of-living crisis. Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, announced the policy during a media engagement in Lagos over the weekend, emphasizing its role in supporting millions of low-income earners struggling to meet basic needs.
The initiative is expected to impact about one-third of Nigeria’s workforce across public and private sectors, freeing up disposable income without requiring salary increases.
Oyedele highlighted that the exemption forms part of a comprehensive overhaul of Nigeria’s outdated tax framework, much of which traces back to colonial-era laws that no longer suit modern economic realities. “These are Nigerians who are barely surviving, yet we still tax them,” Oyedele stated. “Instead of taxing people who cannot meet their basic needs, we should be supporting them.” He noted that many countries have long abandoned similar structures after recognizing them as barriers to growth, productivity, and investment.
Middle-income workers earning between N100,000 and N2 million monthly will also see reduced tax burdens, boosting their take-home pay under the new regime. High earners, comprising just two percent of the workforce, face a top personal income tax rate of 25 percent on incomes exceeding N120 million annually—a rate Oyedele called “modest and targeted.” “This is not about punishing success,” he added. “It’s about restoring balance and fairness in the system.”
The reforms extend significant relief to businesses, slashing the corporate income tax rate from 30 percent to 25 percent while granting zero corporate income tax to small businesses with annual turnover below N100 million. Nigeria ranks among the top 10 globally for the heaviest business tax burdens, despite desperately needing investment for job creation and poverty reduction, Oyedele pointed out. “We are not the United States or China, where capital is abundant,” he said. “Nigeria is searching for investment, yet we operate one of the most complex and punitive tax systems in the world.”
Multiple taxation by various agencies, including non-state actors, has long made compliance costly and abusive; the new framework repeals redundant laws, simplifies processes, and eliminates duplication for greater transparency.
Oyedele dismissed misinformation, such as fears of inheritance taxes or blanket increases, urging informed discourse. “People are entitled to informed opinions, not ignorance,” he remarked, linking the changes to addressing Nigeria’s inequality-fueled tensions. “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.”
