Households earning ₦250,000 or less monthly will no longer be required to pay taxes under Nigeria’s new tax legislation set to take effect on January 1, 2026, according to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
Appearing on Politics Today on Channels Television Thursday night, just hours after President Bola Tinubu signed four major tax bills into law, Oyedele said the reform aims to ease the financial burden on low-income earners, promote fairness, and plug tax evasion loopholes.
“We have eliminated the tax component for people at the bottom, reduced it for the middle, and increased it slightly for those at the top,” Oyedele explained.
He stressed that the objective was not to raise taxes but to make the system more equitable and growth-driven. Under the revised framework, Nigerians earning below ₦250,000 monthly are now officially categorized as “poor” and exempt from personal income tax.
Oyedele, a former tax lead at PriceWaterhouseCoopers (PwC), said the new policy is built on a more realistic, homegrown poverty index, rather than international standards alone.
His committee analyzed household dynamics, average incomes, and rural living conditions to set a more accurate poverty line for Nigeria.
“We debated the question: Who is poor in Nigeria? The World Bank says it’s two dollars a day, but we had to localize it. We concluded that in a household of five, where two people are working and the income is about ₦250,000, that’s just enough to survive — and such families shouldn’t be taxed,” he said.
The exemption forms part of broader tax reforms backed by the Tinubu administration, targeting improved compliance and revenue generation without burdening the poor.
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Protection of small businesses from excessive tax burdens
Focus on economic stimulation rather than austerity
Reduction of tax rates for middle-income earners (₦1.8M–₦2M/month)
A streamlined system to identify and tax high-income individuals more effectively
Oyedele added that the government currently collects just 30% of its potential tax revenue, citing poor systems and widespread evasion.
The new legal framework, he said, is designed to bridge the remaining 70% gap by improving transparency and tax administration.
President Tinubu formally signed the four tax bills into law at a ceremony in the Presidential Villa earlier Thursday, with top government officials, including Oyedele, in attendance.