Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has announced that over 90 per cent of Nigerian workers will be exempted from paying the Pay-As-You-Earn (PAYE) tax under the new tax laws taking effect from January 2026.
Speaking during a session at the ongoing 31st Nigerian Economic Summit (NES#31) in Abuja, Oyedele said the reform is designed to protect low-income earners and those living below the poverty line.
“We cannot tax poverty. About 97 to 98 per cent of Nigerians will no longer pay PAYE, while the top two per cent of high-income earners will pay more,” he stated.
Oyedele emphasised that the reforms are not aimed at increasing taxes but at reducing business risks and simplifying the tax environment.
“The new laws are not about imposing higher taxes. Rather, they are about creating a more predictable and business-friendly environment. For example, some companies are currently taxed on their capital base — a practice the new laws seek to correct,” he explained.
He also urged informal sector operators to formalise their businesses to enjoy the benefits of the new laws, adding that the reforms would make formalisation more attractive.
“We are reducing the corporate tax rate from 30 to 25 per cent and capping personal income tax at 25 per cent, which is still lower than 35 per cent in Ghana and Kenya, and 45 per cent in South Africa,” he added.
Meanwhile, new data released by the National Bureau of Statistics (NBS) in collaboration with the Federal Inland Revenue Service (FIRS) revealed that Nigeria’s 36 states and the Federal Capital Territory (FCT) generated a combined N3.63 trillion in Internally Generated Revenue (IGR) in 2024 — the highest in four years.
Lagos State accounted for over one-third of the total, generating N1.26 trillion, followed by Rivers (N317.3 billion), the FCT (N282.36 billion), and Ogun (N194.93 billion).
The report shows that IGR across the states rose cumulatively to N10.88 trillion between 2021 and 2024, driven largely by tax revenues, which contributed about 73 per cent of total collections. In 2024 alone, tax revenue stood at N2.66 trillion, while other sources such as fees, licences, and income from state-owned enterprises contributed N968 billion.
Despite the impressive growth, analysts have warned that the concentration of fiscal capacity in a few economically vibrant states poses a threat to balanced national development. They urged low-performing states to diversify revenue through agriculture, mining, and services to strengthen fiscal federalism and ensure inclusive growth.
