Workers in Nigeria are beginning to reap the benefits of the new tax laws, which came into effect in January, as a number of formal-sector workers received higher salaries for the month due to the lower income tax rate.
The Nigerian Tax Reforms Acts, signed into law on 26 June 2025, have been lauded as people-centric, growth-focused, and efficiency-driven, and among their goals is the protection of low-income earners, based on the understanding that a fair tax system should not punish poverty or burden the most vulnerable.
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Taiwo Oyedele, the chair of the Presidential Fiscal Policy and Tax Reforms Committee, disclosed at the Nigerian Economic Summit in Abuja last October that about 98 per cent of Nigerian workers will either be excluded from Pay as You Earn or pay lower taxes under the new law.
The law exempts workers with an annual gross income of N1.2 million (equivalent to N800,000 taxable income) or less from paying tax. It automatically excludes national minimum wage earners from the tax net. Progressive tax rates are to be applied to any income above that threshold up to 25 per cent for income exceeding N50 million.
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Employees earning annual gross incomes between N1.2 million and N20 million are to pay lower taxes under the new regime.
Nigerian workers speak
PREMIUM TIMES spoke to a number of workers to ascertain the implementation of the new tax rates and their impact on employees’ pay.
“The implementation of the new tax reform had a positive impact on my January earnings. The net monthly earnings increased, which I believe is due to revised tax reliefs and deductions,” said Ololade Ruel Jethro, who works at Zoomlion Nigeria Limited, a Lagos-based waste management company.
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“The increase is approximately N2,000 in my monthly income,” he added.
A customer service team lead at Stanbic IBTC Bank in Lagos, who does not want his name mentioned, also said he noticed a pay increase in January.
“Yes, there was a reduction in tax and an increase in salary. It wasn’t so much, though. I think it was about 5 per cent or thereabout,” he said.
“There were some of my bosses that had increase in tax and reduction in salary too,” he further stated.
For Akinlaso Jamiu, who works at a Jaiz Bank branch in Ilorin, there was a pay increase in January, although not significant.
“The difference was not much, and it was around N3,000 plus. That’s the difference between the tax I paid in December 2025 and January 2026, which increased my monthly income a bit,” he told PREMIUM TIMES.
Awwal Omotoso Jamiu, an employee of the same financial institution, said he witnessed a slight increase in salary during the month.
“The effect of the new tax is positive on my January earnings as there’s an upward shift in the salary received for January 2026, compared to December 2025,” he said.
Mustapha Azeez, the chief financial officer of TeamAce, Lagos, said the new tax law largely applies to what is obtainable in the industry.
“For those that have negotiated their salaries at gross you know that that’s the only one that the effect will be on the employee. So their take-home will always increase because their tax will reduce,” he said.
“I negotiated my salary at net, so there’s no effect on my salary. The employer take the difference, be it to the advantage of the employer, be to the disadvantage of the employer.”
Onayemi Taiwo Oludare, a sales representative at Tamy Consulting/WAMCO Nigeria in Osogbo, said he experienced a slight increase in his January salary.
“Actually, compared to what I was paying last year, my monthly tax in January 2026 has reduced. As a result, my salary was increased by N308.25 in January 2026,” he stated.
“The change is so minimal but it’s still obvious that the tax law effected it, and I can say it’s as result of reliefs in the new tax system. So right now, I pay less tax.”
A SME finance specialist at First City Monument Bank disclosed that his tax for January increased, compared to before.
“It used to be around 18 per cent, but I noticed that the deduction for January was higher. That reduced my salary,” he stated.
However, a couple of workers noted that they have yet to observe any difference in their salary.
A staff member of Cornerstone Insurance, who spoke in confidence, remarked that he didn’t notice any change in his salary for January.
“Not yet. I’m yet to start seeing the effect of that on my pay.”
An official of the Nigerian Security and Civil Defence Corps told PREMIUM TIMES that there was no change in her January salary. A procurement officer at the Nigerian Postal Service also said the same.
Tax experts’ views
According to Ismaila Afeez, the CEO of Olad Finance Limited, some salary earners witnessed an increase in their pay, while others did not for some reason.
“Established reliefs like the old Consolidated Relief Allowance (CRA) were removed and replaced with a new formula for rent relief and other deductions. In some cases, this can reduce allowable deductions, increasing taxable income compared to before and therefore increasing tax,” the tax consultant told PREMIUM TIMES.
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He also noted the possibility that some companies calculated January salaries under the old tax system, particularly when the employer’s payroll cycle closed before the new rules were fully implemented in the HR/payroll software. This, he said, might have caused some workers not to see any difference in their pay.
“Where employers or payroll systems applied the new tax framework incorrectly, some individuals might have seen higher deductions or delays in adjustments,” Mr Afeez said.
For Olatunji Abdulrazaq, founder of Lagos-based Taxmobile. Online, employees of companies that are not compliant with statutory deductions, such as pension contributions, NHIS, and the housing fund (NHF), will likely experience lower salaries under the new tax law.
“There are some companies that take advantage of statutory deductions. People who said they have not seen the effect of the tax law on their salary need to know if their companies are taking advantage of statutory deductions,” he said.
“The impact on each employee is subject to what statutory deduction the company is taking advantage of,” he added
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