It’s rare for government announcements to generate widespread relief. But when Dr. Taiwo Oyedele — Chairman of Nigeria’s Presidential Committee on Fiscal Policy & Tax Reforms — spoke recently, many Nigerians sighed with both relief and hope.
At the 31st Nigerian Economic Summit (NES31) in Abuja, Oyedele made a bold declaration: starting January 2026, about 97-98% of Nigerian workers will either no longer pay Pay-As-You-Earn (PAYE) tax, or will see their PAYE rates drastically reduced.
What Does “98% Exempt or Lower PAYE” Mean?
- Full exemption for many: About one-third of public and private sector workers will completely stop paying PAYE.
- Lower taxes for many more: Beyond those exempted, a large chunk will see significantly lower deduction from their salaries under PAYE.
- Only the top 2-3% of high-earners will face increases or remain in higher tax brackets.
Why This Matters Deeply
For many Nigerians, especially those living paycheck to paycheck, PAYE deductions have been a major source of frustration. Inflation, rising costs of food, rent, school fees, transport — these take a heavy toll. So, the prospect of having less of their income eaten up by tax is more than just good policy; it’s a chance at breathing room.
It’s not just about money saved. It’s also about dignity and fairness. Oyedele emphasized that one of the guiding principles is: “You cannot tax people in poverty.”
Key Details & Some Open Questions
Here are some things the reforms have laid out, plus others still waiting more clarification:
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What’s Clear |
Still Unclear / To Be Clarified |
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The reforms will kick in from January 2026. |
Exact income brackets (for middle-income earners) where cuts vs full exemption will apply. Some are mentioned (household thresholds) but many want clearer definitions. |
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PAYE cut or exemption applies both to public and private sector workers. |
How the states and local governments will absorb revenue losses — concern especially from subnationals. |
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Corporate tax rate will drop from 30% to 25%, and companies with turnover up to a certain amount (e.g. ₦100 million) may enjoy zero rate. |
The implementation logistics: how quickly payroll systems, workers, businesses will adapt. Also, how effectively enforcement will be to avoid abuse. |
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For low-income households, essential services like food, healthcare, etc., will see tax relief measures. VAT reforms etc. |
How inflation and other macroeconomic issues might dilute the effect of the tax cuts. Will savings in tax translate to improved purchasing power? |
The Reaction So Far
Not surprisingly, the announcement was met with applause. Many Nigerians online and in conversations see it as a needed relief. Some are cautiously optimistic, saying it’s a major win — especially for those who’ve felt overtaxed as inflation bites.
Labour groups, business owners, and ordinary citizens are watching closely, hoping that this isn’t just policy promise but policy lived.
What to Watch Next: Will It Deliver?
To see if the hope turns into reality, here are some markers:
- Clarity in law — precise thresholds, income ranges, the definition of “low, middle, high income” must be public and transparent.
- Effective government communication — so workers know what to expect, adjust budgeting, etc.
- Implementation discipline — that tax authorities, employers, and businesses apply the reforms correctly.
- Safeguards against abuse — ensuring high-earners don’t hide incomes, and that exemptions are not manipulated.
- Monitoring cost-of-living impact — do these tax changes meaningfully ease burdens (housing, fuel, food, etc.)?
Bottom Line
This could be one of Nigeria’s most significant tax policy shifts in decades — especially for ordinary citizens. If executed well, it has the power to put more money in people’s pockets, reduce poverty pressures, and revitalize trust in government policy.
But the caveat remains: implementation matters. Many good policies stumble when the systems, communication, or follow-through are weak. Nigerians will be watching — and expecting.
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