Tax Reforms Raise Workers Income As PAYE Burden Eases

Nigerian workers are beginning to feel the impact of the Federal Government’s tax reforms, with many receiving higher net salaries following cuts in Pay As You Earn (PAYE) deductions.

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, confirmed the development on Monday, saying feedback from employees paid for January 2026 showed noticeable reductions in PAYE liabilities.

In a post on X, Oyedele said the early outcomes indicate that the new tax regime is already delivering relief to salary earners, particularly those whose taxes are deducted directly by their employers.

The PAYE cuts form part of broader tax reforms being rolled out by the Federal Government to raise disposable income, stimulate economic activity and streamline tax administration.

According to Oyedele, the lower deductions reflect the immediate effect of recently enacted tax laws aimed at easing the burden on workers.

“Initial feedback from January 2026 salary payments confirms that many workers are now taking home more pay due to reduced PAYE under the new tax framework,” he said.

The reforms are anchored on the Nigerian Tax Act (NTA) and the Nigerian Tax Administration Act (NTAA), which the government says are designed to simplify the tax system, eliminate overlapping taxes and ensure a fairer distribution of tax obligations.

Oyedele has previously disclosed that close to 98 per cent of Nigerian workers are expected to either pay no PAYE or face lower deductions under the new regime, while about 97 per cent of small businesses will be exempt from corporate income tax, value-added tax and withholding tax.

He added that large companies would also see lower overall tax exposure under the revised laws.

Addressing public concerns, Oyedele said the reforms are structured to reduce the total tax burden on Nigerians while improving compliance and efficiency across the system.

However, he noted that ongoing engagement would be required to ensure uniform application of the reforms, revealing that the Committee is working with the Joint Revenue Board to convene a stakeholder session involving payroll managers and tax administrators.