New Tax Law Exempts Nigerians Earning Below ₦250,000 Monthly from Income Tax — Oyedele

Nigerians earning less than ₦250,000 per month will be exempt from paying income tax beginning January 2026, according to Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.

Speaking on Channels Television’s Politics Today shortly after President Bola Tinubu signed four new tax bills into law on Thursday, Oyedele explained that the reforms are designed to stimulate economic growth and ensure equity in the tax system, rather than increase tax burdens.

He stated that under the new laws, individuals or households earning ₦250,000 or less per month are now classified as poor and, therefore, exempt from income tax obligations.

“This tax law will not give you cash in your pocket, but at least it won’t take your cash away if you are poor,” Oyedele said.

He clarified that the reforms are structured to eliminate tax obligations for low-income earners, reduce the tax burden for the middle class, and slightly increase taxes for high-income earners. Those earning between ₦1.8 million and ₦2 million monthly — estimated at about 5% of the population — will see their tax rates reduced under the new framework.

To determine the exemption threshold, Oyedele explained that the committee evaluated poverty standards beyond global benchmarks, using a Nigerian context that accounts for rural lifestyles and subsistence living.

“We drew our own poverty line based on an average Nigerian household of five, with two people working. We estimated that if such a household earns around ₦250,000 monthly, they can meet basic needs, though without luxury. These people should not be taxed,” he said.

Oyedele also emphasized the broader goal of the reforms: improving tax efficiency and compliance. He noted that Nigeria currently collects only 30% of its potential tax revenue and that the new laws are aimed at closing the 70% gap without placing undue burden on the poor.

He described the reforms as “efficiency-driven, growth-focused, and people-centric,” with the overarching objective of fostering inclusive economic development.