Nigerians Earning Below N250,000 Monthly Exempted From Income Tax Under New Laws – Oyedele

In a significant move aimed at easing the financial burden on low-income earners, Nigerians earning N250,000 or less per month will now be exempt from paying Personal Income Tax (PIT). This crucial detail was disclosed by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, following President Bola Tinubu’s assent to four new tax reform bills on Thursday.

Speaking on Channels Television, Oyedele explained that this exemption is a core component of the new fiscal laws designed to stimulate economic growth and reduce the strain on struggling families. He stated that households earning N250,000 or less per month are now officially classified as “poor” within the context of Nigeria’s new tax framework, and thus, “they don’t even have enough” to be taxed.

“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 remarked, emphasizing the pro-poor nature of the reforms. He added that the new laws are efficiency-driven, growth-focused, and people-centric, ensuring that the government does not “tax poverty.”

The reforms, set to take effect from January 1, 2026, also include other key provisions. Value Added Tax (VAT) remains at 7.5%, with new exemptions on essential goods and services consumed by the poor, such as food items, medical services, pharmaceuticals, educational fees, and electricity. Small businesses with an annual turnover of N50 million or less are also exempted from income tax, while Personal Income Tax for individuals earning above N50 million annually will see a 25% rate. Corporate Income Tax for medium and large companies will be reduced from 30% to 25% starting in 2026.

Oyedele highlighted that the committee painstakingly debated the poverty line for an average Nigerian, considering factors like family size and local economic realities, to arrive at the N250,000 monthly threshold. He noted that while taxes for the very lowest earners are eliminated, those in the middle-income bracket (estimated at about N1.8 to N2 million monthly, representing about 5% of the population) will experience a reduction in their tax burden, and higher earners will contribute slightly more.

The overall objective of the new tax laws is not to increase taxes but to make the system more efficient, fair, and targeted, according to Oyedele. He revealed that Nigeria currently collects only about 30% of its potential tax revenue, and the reforms aim to close this 70% gap by making it more difficult and costly to evade taxes, while simplifying compliance for those doing the right thing.

President Tinubu’s assent to the Nigeria Tax Bill, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Bill marks a significant step in the nation’s fiscal policy reform agenda, promising a unified and more equitable tax system.