New Tax Law: Four Categories of Nigerians Exempted from Paying Tax
- Nigeria’s Fiscal Reforms introduced sweeping changes to the tax system, set to begin on January 1, 2026
- The new law promised relief for low-income earners, average taxpayers, and small businesses across the country
- Officials confirmed that four categories of Nigerians would be exempted from paying personal income tax under the revised rules
Nigeria’s Fiscal Reforms announced that from January 1, 2026, new tax laws would come into effect, offering reliefs and exemptions to low-income earners, average taxpayers, and small businesses.
Officials said the changes were designed to ease the financial burden on citizens and encourage compliance with tax regulations.
Source: Twitter
Personal income tax exemptions
Under the revised Personal Income Tax (PAYE) rules, four categories of Nigerians were identified as exempt from paying tax:
- Individuals earning the national minimum wage or less were exempt.
- Citizens with an annual gross income up to ₦1,200,000, which translated to about ₦800,000 taxable income, were exempt.
- Those earning annual gross income up to ₦20 million would benefit from reduced PAYE tax.
- Gifts were exempt from taxation.
Government’s position on tax relief
Authorities explained that the reforms were aimed at protecting vulnerable groups while ensuring fairness in the tax system. Officials noted that the exemptions would particularly benefit workers on minimum wage and small-scale earners.
Impact on Nigerians
Tax experts said the new law could improve disposable income for millions of Nigerians and reduce the pressure on households struggling with rising living costs. Analysts also suggested that the reduced PAYE rates for middle-income earners would encourage voluntary compliance and strengthen government revenue in the long term.
Nigeria fiscal reforms
Nigeria’s Fiscal Reforms, set to take effect from January 1, 2026, introduced a new framework aimed at easing the tax burden on citizens while strengthening compliance.
'The reforms focused on personal income tax, offering exemptions and reliefs to low-income earners, average taxpayers, and small businesses.
Under the new rules, individuals earning the national minimum wage or less were exempt from tax. Similarly, those with an annual gross income up to ₦1,200,000, translating to about ₦800,000 taxable income, were also exempt. For middle-income earners, the law provided reduced PAYE rates for those earning up to ₦20 million annually. In addition, gifts were excluded from taxation.
Officials explained that the reforms were designed to promote fairness and equity in the system, ensuring that vulnerable groups were protected. Analysts suggested that the changes could boost disposable income, encourage voluntary compliance, and support economic growth by reducing pressure on households and businesses.
Source: UGC
Lies, truths, about new tax law
Legit.ng earlier reported that Helen Duru, a 20-year-old, was frantic when she saw a post about the tax law for the first time. One message stops her cold. “From next year, the government will tax every naira that enters your bank account, even gifts, every money. If you don’t want to pay, the government will debit your bank account”.
Helen freezes. She earns N70,000 a month as an administrative assistant at Ikeja Computer Village. By the time Pay-As-You-Earn (PAYE) is deducted, and she pays for transport and food, she is often forced to borrow before the next payday arrives.
Source: Legit.ng
