Nigeria’s new personal income tax framework took effect from January 1, 2026, introducing exemptions and reliefs aimed at easing the burden on low- and middle-income earners while improving overall tax fairness.
Under the revised Pay-As-You-Earn (PAYE) structure, workers earning the national minimum wage or less are fully exempt from personal income tax. This measure is designed to protect the country’s lowest-paid workers amid rising living costs.
The reform also extends full exemption to Nigerians earning up to ₦1.2 million in gross income annually. According to official explanations, this roughly translates to about ₦800,000 in taxable income after allowable deductions, placing many low-income workers outside the tax net.
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Middle-income earners earning up to ₦20 million per year are not fully exempt but will benefit from reduced PAYE rates. This means they will pay lower effective taxes compared to the previous system, offering some relief while maintaining their contribution to government revenue.
In addition, the new rules classify genuine gifts as non-taxable, meaning individuals will no longer pay personal income tax on gifts received. Government officials say the changes are intended to encourage voluntary tax compliance, protect vulnerable households, and strengthen disposable income, which could support small businesses through increased consumer spending.
