Individuals earning up to N100,000 per month will enjoy a personal income tax exemption next year.
Nigeria’s new tax reforms introduce this significant relief for low-income earners starting January 2026.
Okay News reports that Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, disclosed this on Friday during a workshop in Lagos.
Tax Exemption Details For Low-Income Earners
Oyedele said the reforms ease the tax burden on low-income earners.
The first N800,000 of taxable income now attracts zero percent tax.
This means workers earning about N100,000 monthly will benefit from the personal income tax exemption.
Even with a minimum wage benchmark of N70,000, workers will pay significantly less tax under the new law.
The tax expert stressed that many people confuse gross income with taxable income.
Taxable income gets calculated after statutory deductions and allowable contributions are removed.
Oyedele urged workers to calculate their own tax using the official tax calculator.
He advised employees to question their accountants or employers if their take-home pay does not increase as expected.
Business Support And Capital Market Reforms
The Nigeria personal income tax exemption reforms aim to promote fiscal equity.
Low-income earners get exempted while high-income earners contribute a fairer share.
The reforms include changes to income tax rates across different earning brackets.
Oyedele emphasised that formalising the informal sector remains critical to increasing government revenue.
The government introduces additional measures to support businesses through the tax reforms.
These include a reduction in the corporate income tax (CIT) rate.
Businesses will also benefit from Value Added Tax (VAT) input credits.
These changes create a more business-friendly environment and stimulate investment in Nigeria.
The reforms introduce stronger measures to improve trust and accountability in Nigeria’s tax system.
The creation of the Office of the Tax Ombudsman represents a key innovation.
This office will help resolve tax disputes and protect taxpayers from unfair treatment.
Capital gains tax has been harmonised with income tax to close loopholes.
Investors in the capital market will benefit from specific exemptions under defined conditions.
These include reduced corporate income tax and exemption of withholding tax on dividends.
Oyedele acknowledged that implementing the new tax laws will face some challenges.
Low levels of trust, misinformation, and capacity constraints remain key risks.
Effective communication and stakeholder engagement are crucial to managing the transition.
President Bola Tinubu’s fourth set of executive orders includes suspension of several taxes.
These include excise tax on airtime, telecom data, and the cybersecurity levy.
