Relief For Low-Income Earners As Nigeria Introduces Personal Income Tax Exemption.
A wave of optimism has swept across Nigeria following the government’s announcement of a significant tax reform aimed at easing the financial burden on low-income earners. As of 26 June 2025, individuals earning an annual income of N800,000 or less are now exempt from paying personal income tax, a move described as a lifeline for millions of Nigerians struggling with economic challenges.
The reform, part of the newly signed Nigeria Tax Act (NTA) by President Bola Ahmed Tinubu, marks a progressive shift in the country’s tax policy. The legislation is one of four Tax Reform Bills designed to boost economic growth, streamline revenue generation, and create a more equitable tax system. For many Nigerians, particularly those in low-wage jobs, this exemption is being hailed as a transformative step towards financial relief.
The exemption threshold targets a significant portion of the population, with estimates suggesting that a majority of workers in both public and private sectors fall within this income bracket. Previously, employees earning above the national minimum wage—recently increased to N70,000 per month from 1 May 2024—were subject to Pay As You Earn (PAYE) deductions. Now, those earning up to N800,000 annually, equivalent to roughly N66,667 per month, will retain their full income, free from tax obligations.
“This is a game-changer for ordinary Nigerians,” said Adeola Adebayo, a market trader in Lagos. “Every kobo counts, and not having to pay tax means I can save more for my family’s needs.” Her sentiment echoes the relief felt by many low-income households, who have long grappled with rising living costs amid inflation and economic uncertainty.
The new tax policy also introduces a more progressive personal income tax structure for higher earners. Individuals with incomes exceeding N50 million per year will now face a maximum tax rate of 25%, ensuring that wealthier Nigerians contribute a fairer share to the nation’s development. Additionally, the NTA has raised the tax exemption threshold for compensation related to loss of employment or injury from N10 million to N50 million, offering further relief to those facing unexpected hardships.
Economic analysts have praised the reform for its focus on inclusivity. “By exempting low-income earners, the government is putting money back into the pockets of those who need it most,” said Dr. Chidi Okonkwo, an economist based in Abuja. “This could stimulate local economies as people have more to spend on essentials, potentially boosting small businesses.”
The tax reform aligns with broader efforts to improve Nigeria’s business environment and attract investment. Small companies with annual turnovers of N100 million or less are also exempt from certain taxes, including Companies Income Tax and Capital Gains Tax, further supporting economic growth at the grassroots level.
However, some experts caution that the government must ensure effective implementation to maximise the benefits. “The success of this policy depends on clear communication and robust enforcement by the Federal Inland Revenue Service,” noted Tax Consultant Funmi Adeyemi. “Taxpayers need to be aware of their rights, and the authorities must prevent loopholes that could undermine the reform’s intent.”
The announcement has sparked widespread discussion on social media, with many Nigerians expressing gratitude for the relief. Posts on X have highlighted the potential savings—estimated at N84,000 annually for those previously taxed at the minimum rate—as a significant boost for low-income households. Others have called for continued reforms to address broader economic challenges, such as unemployment and infrastructure deficits.
As Nigeria navigates its economic recovery, the personal income tax exemption for those earning N800,000 or less stands as a beacon of hope. For millions of citizens, this policy offers not just financial reprieve but a renewed sense of optimism for a more inclusive future.
