Nigerians Earning Below ₦250,000 Monthly Are Poor and Are Exempted From Tax of Any Kind — Taiwo Oyedele

A new tax framework that will exempt low-income earners in Nigeria from paying personal income tax is set to take effect from January 2026. This policy, announced by Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, follows President Bola Tinubu’s approval of four new tax bills on Thursday. The announcement was made during an interview on Channels Television's Politics Today, shedding light on sweeping reforms targeted at easing economic pressure on vulnerable Nigerians while expanding the country's tax net through better efficiency and fairness.

Oyedele, who was appointed by the President in July 2023, emphasized that the core objective of the new tax laws is not to increase the tax burden but to improve the economy and ensure that taxation is equitable. He said that these changes are meant to reduce pressure on those who can least afford it while encouraging growth and reducing evasion among higher earners and large businesses.

According to him, individuals or households earning N250,000 or less per month are now officially categorized as poor by the federal government. These citizens will be exempt from income tax under the new laws. The policy shift is built around the principle that governments should not tax people into deeper poverty, a recurring problem in developing economies.

Oyedele explained that the decision was reached after extensive deliberation within the committee, which considered multiple global and local data points before setting the income threshold. He noted that while international benchmarks such as the World Bank’s $2.15-per-day poverty line were considered, they ultimately adapted the criteria to Nigeria’s realities. Factors like access to subsistence farming, informal housing, and zero transport costs in rural areas were taken into account.

To establish a localized standard, the committee examined the financial needs of an average Nigerian household consisting of five individuals, with two income earners. Using this metric, they calculated that a combined monthly income of N250,000 barely meets basic living needs without offering any room for savings or luxury. This, they concluded, constitutes a poverty threshold in Nigeria’s unique context.

“We have eliminated the tax component for people at the bottom, we have reduced for people at the middle, and we have increased slightly for people at the top,” Oyedele said. He added that individuals earning between N1.8 million and N2 million per month would see some tax relief as well, though not total exemption. That income range, he pointed out, represents a mere 5 percent of Nigeria’s total population.

The reforms aim to support productivity and formal sector growth. Oyedele argued that taxing citizens who can barely afford food, shelter, and healthcare stifles economic activity and discourages compliance. By easing the burden on those earning the least, the government hopes to make tax policy more humane and practical, while still capturing more revenue from those who can afford to pay.

The revised laws are built on three pillars: efficiency, growth, and inclusion. Oyedele stressed that the reforms are not about giving people direct cash transfers, but about ensuring that what little they earn is not eroded by government levies. “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,” he stated.

Despite having one of the lowest tax-to-GDP ratios globally, Nigeria currently collects only about 30 percent of the taxes it is capable of generating. Oyedele expressed hope that with better targeting, technology, and simplified procedures, the country could close the 70 percent revenue gap.

The strategy is to focus tax efforts on wealthier individuals and large corporations while allowing struggling families some financial breathing room. By doing so, the reforms also seek to shift public perception around taxation, making compliance a civic duty rather than a burden.

Oyedele concluded that tax policy must align with social justice, national development, and economic growth. He described his leadership of the tax reform committee as both challenging and transformative, adding that the laws mark a significant turning point for the nation’s fiscal direction.

As the 2026 implementation date approaches, the government is expected to embark on public education campaigns to ensure that both citizens and businesses understand their new obligations, and more importantly, their new rights under the updated tax framework.