The Federal Government of Nigeria has announced plans to exempt millions of low-income workers from paying personal income tax, as part of a major tax reform aimed at easing the cost-of-living crisis and addressing what officials describe as an outdated and inequitable system.

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said the exemption will apply to all workers earning N100,000 or less per month in both public and private sectors, starting January 2026. The policy is expected to benefit roughly one-third of the nation’s workforce.

“These are Nigerians who are barely surviving, yet we still tax them,” Oyedele said. “Instead of taxing people who cannot meet their basic needs, we should be supporting them.”

The reforms also aim to reduce the tax burden on middle-income earners, with individuals earning between N100,000 and N2 million monthly set to pay lower taxes, boosting their disposable income. High-income earners will carry a slightly higher burden, with a top rate of 25% for those earning N120 million or more annually.

Oyedele noted that Nigeria’s tax system is largely rooted in colonial-era laws that no longer suit the country’s economic realities. The reforms include simplifying tax laws, reducing corporate income tax from 30% to 25%, and exempting small businesses with annual turnovers below N100 million from corporate tax entirely.

The government also plans to tackle multiple taxation and streamline the operations of tax-collecting agencies to make compliance easier and reduce opportunities for abuse.

“These reforms are about fairness, inclusion, and growth,” Oyedele said. “If we get the incentives right, businesses will grow, jobs will be created, and Nigeria will work better for everyone.”