Nigerians in Bottom 98% to Pay Less or No Tax from January 2026, Affirms Tax Reform Chairman

By Emmanuel Kwada 

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has reiterated that the vast majority of Nigerians, specifically those in the bottom 98% of income earners will pay less or no tax starting January 2026 under the newly enacted tax reform laws.

Oyedele addressed what he described as “misleading claims” circulating about the reforms, emphasizing that the changes aim to reduce overall tax burdens rather than introduce new ones.

The reforms, signed into law earlier this year, include provisions to exempt low-income households and small businesses from various taxes, while providing relief to larger entities through lower rates and credits.

Oyedele highlighted that approximately 98% of Nigerians and businesses will benefit from lower taxes, with only the top 2-2.5% of high earners facing a potentially higher burden to ensure a more progressive system. “Your taxes are coming down next year, not going up,” he stated, countering narratives that suggest otherwise.

Key features of the reforms include benefits for individuals, food, education, healthcare, small companies, and large companies.

For individuals, particularly the bottom 98% of earners, the reforms aim to reduce or eliminate personal income tax, with exemptions for households earning up to ₦250,000 monthly or workers below ₦800,000 annually, and rent relief up to ₦200,000.

The reforms also remove VAT on food, education, and healthcare, leading to lower costs for essentials. Small companies and SMEs will benefit from 0% corporate income tax and exemption from VAT if turnover is below certain thresholds. Large companies will face reduced corporate tax rates, potentially to 25%, and full VAT credits on operational costs.

The overall system will be progressive, with only high earners (top 2%) paying more to fund relief for the majority. No new taxes have been introduced.

These measures aim to alleviate financial pressures on low- and middle-income groups. The committee used data from the National Bureau of Statistics to define poverty thresholds and argued that delaying the reforms would prolong higher taxes for most Nigerians.

Oyedele also addressed false claims spreading on social media and in the press, including assertions of new taxes, fears of automatic bank account debits, and misinformation about targeted income.

He cited an example of a individual who avoided investing in bank rights issues due to erroneous beliefs about a 30% capital gains tax, only to learn they would be fully exempt—resulting in lost opportunities. “Good news doesn’t trend, sensational misinformation does,” Oyedele remarked, urging Nigerians to challenge unsubstantiated claims by asking for specifics on alleged tax increases.

The announcement has sparked a mix of support and skepticism online. Proponents, including economists and business leaders, praise the reforms for promoting equity and economic growth.

For instance, one analyst described the changes as “illuminating” and beneficial for 98% of Nigerians and all businesses. Supporters highlight the Pareto principle (80/20 rule), arguing that targeting the wealthy aligns with global best practices. Labor leaders like NLC President Joe Ajaero have also shifted stances, with some acknowledging the relief for low earners after initial calls for withdrawal.

Critics, however, raise concerns about implementation and unintended impacts. Some argue that the reforms could inadvertently burden informal sector workers whose annual bank inflows exceed thresholds (e.g., ₦12 million), leading to tax disputes over deductibles like rent or insurance. Others point out the “two-way” nature of the statistic: while 98% exemptions provide relief, it underscores widespread poverty, as many earn below taxable levels.

Data privacy issues have emerged, particularly regarding plans to track remote workers’ income, sparking debates over surveillance and compliance. Progressive tax rates for higher earners—ranging from 7% for ₦1-1.3 million annually up to 24% for over ₦12.8 million—have fueled discussions on whether the wealthy will bear the load effectively without evasion.

As the January 1, 2026, implementation date nears, Oyedele has called for greater tax awareness to combat misinformation, sharing a video explanation for clarity.