Nigerian workers have begun to see the impact of the new tax era, which began on January 1, 2026, after President Bola Tinubu signed the Nigeria Tax Act 2025 into law.
Following the full implementation of the new tax laws, many low-to-middle-income earners are reporting a marginal increase in their monthly take-home pay.
The centerpiece of the 2026 reform is the significant expansion of the tax-exempt threshold. Under the updated framework, any individual earning an annual income of ₦800,000 or less (approximately ₦66,667 per month) is now completely exempt from Personal Income Tax (PIT). This shift means that a vast majority of workers earning the national minimum wage of ₦70,000 are keeping more of their gross earnings than in previous years.
According to data from the Presidential Fiscal Policy and Tax Reforms Committee, nearly 98% of the Nigerian workforce is expected to benefit from some form of tax reduction or total exemption as the new tax era begins.
A banker, Adetunji Morgan, who spoke with the press, said his salary rose by about N5,000 following the adjustment. “Yes, the salary increased. I think it increased by about N5,000 for me,” he said.
A Lagos State civil servant, Adedayo Lawal, said it was difficult to determine the exact effect of the PAYE reduction on his earnings without reviewing his payslip. He explained that a Yuletide allowance paid in December further complicated the assessment. “We were given a Yuletide allowance in December, but only 50 per cent of it was paid, with a promise that the second part would be paid this month,” he said, adding that he was not expecting a significant increase.
Similarly, Tolulope Ifeanyi, an employee in the financial services sector, described the increment as minimal. “Mine increased, oh, just a little, sha,” she said.
For a media practitioner, Joshua Austin, the increase was symbolic rather than impactful. “My salary increased, but it is not enough to buy me shawarma for one evening,” he said, noting that a wrap of his preferred shawarma costs N2,500. “As for an increase, yes, it increased, but what is the value of the increase?”
A verified X user, Gabriel Bolatito, also acknowledged the marginal change, stating that while the reduction in PAYE was small, it aligned with prior expectations and resulted in a slight net increase.
“I received my salary last week, and my take-home pay is slightly higher than before. It’s not a huge change, but it helps cover some of the rising costs of living,” said Uchechi Nwankamma, a contract staff at Access Bank in Lagos earning between N200,000 and N250,000 monthly.
Speaking on the development, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, stated the committee had received confirmations from workers who noticed reductions in their PAYE tax.
Taking to his official X (formerly Twitter) handle on Monday, Oyedele wrote, “We are pleased to note the feedback from workers who have received their salaries for January 2026 and confirmed a reduction in their PAYE tax, resulting in higher take-home pay under the new tax laws.”
Speaking also on why some Nigerian workers may experience a reduction in net pay, Partner, Tax Reporting and Strategy at PwC, Kenneth Erikume, explained the implications of the graduated tax structure at the 2026 Nigeria Economic Outlook organised by FirstBank. He noted that income up to N800,000 is now exempt, with tax rates applying progressively thereafter, and income above N50m taxed at 25 per cent.
Erikume said that, assuming no significant reliefs are claimed, individuals earning below N25m annually are likely to see an increase in take-home pay due to reduced taxes, while those earning above N25m would face higher tax obligations and reduced net income. He added that organisations would need to consider how to manage this differential from a human capital perspective.
“Staff earning below N25m will retain the benefit, and that cannot be clawed back. However, for staff earning above N25m, the question becomes whether the company will absorb part of the increased tax burden through a payroll review aligned with this change,” he said, stressing that payroll adjustments are an urgent issue that organisations must address immediately.
This comes as the new tax regime has continued to generate massive controversies. Lawmakers had raised concerns over discrepancies between gazetted and parliamentary versions of the laws, prompting official clarifications and certified publications. Despite these concerns, the government pressed ahead to kick off the new tax era, stressing that the measures are essential to enhance disposable income and reduce bureaucratic inefficiencies in tax collection.
