The Federal Government has announced a major tax reform under Nigeria’s new fiscal policy framework, which will exempt individuals earning below ₦800,000 annually from paying personal income tax starting from 2026.
The measure, part of a broader effort to ease the burden on low-income earners and promote equitable taxation, was disclosed in Abuja by officials of the Presidential Committee on Fiscal Policy and Tax Reforms.
According to the committee’s chairman, Taiwo Oyedele, the initiative is designed to create a fairer tax system, reduce inequality, and boost compliance by ensuring that taxation reflects the true capacity of Nigerians to pay.
“From 2026, individuals earning less than ₦800,000 a year roughly ₦66,000 a month will no longer be subject to personal income tax,” Oyedele explained. “The idea is to protect the poor and vulnerable, while ensuring that the wealthy and corporate entities contribute their fair share.”
He noted that the reform aligns with President Bola Ahmed Tinubu’s commitment to improving citizens’ welfare and simplifying Nigeria’s tax system. The government, he added, aims to balance revenue generation with economic growth, rather than impose excessive taxes on struggling citizens.
The new tax policy also proposes consolidating multiple levies and streamlining the country’s over 60 existing taxes into fewer, more efficient categories. This move is expected to boost investor confidence and make the business environment more predictable.
“Many Nigerians are currently overtaxed in informal ways,” Oyedele said. “Our approach will reduce the number of taxes to less than 10 and ensure that everyone understands what they owe and why.”
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The planned exemption will especially benefit workers in the informal sector, including artisans, traders, and low-income civil servants who currently struggle under the weight of multiple local and state taxes.
Experts have welcomed the move, describing it as a progressive step that could stimulate household spending and economic productivity. Dr. Muda Yusuf, an economist and CEO of the Centre for the Promotion of Private Enterprise (CPPE), said the reform would “give breathing space to millions of Nigerians battling inflation and declining purchasing power.”
He, however, urged the government to ensure effective implementation and resist introducing new levies that could offset the relief. “It’s a good policy, but enforcement at the state level is key. Otherwise, multiple taxation will persist,” Yusuf cautioned.
The Federal Government is also working on a new national tax code, expected to be introduced in 2025, which will unify federal and state tax systems and introduce a more transparent digital filing and payment process.
When fully implemented, the reforms are projected to raise Nigeria’s tax-to-GDP ratio from the current 10% to 18% within three years, without overburdening citizens.
Government officials say the new policy will not only reduce hardship for low-income earners but also rebuild trust in the tax system by showing that public revenue is used for tangible development outcomes.