Nigerian workers may soon have more money in their pockets, thanks to proposed tax reform bills designed to ease financial pressure and promote economic growth. Dr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has revealed that the reforms, when passed into law, will offer direct benefits to millions of Nigerians, particularly low- and middle-income earners.
One of the headline provisions is the full exemption from Pay As You Earn (PAYE) tax for individuals earning up to ₦1.3 million per year—or just over ₦100,000 monthly. This measure alone is expected to positively impact at least 35% of workers across both the public and private sectors.
The bills also propose lower PAYE rates for those earning up to ₦20 million annually (about ₦1.7 million monthly), which could affect another 60% of the workforce. In a show of appreciation for national service, members of the armed forces will be entirely exempt from PAYE tax.
The reforms go beyond income tax. Oyedele outlined sweeping Value Added Tax (VAT) exemptions targeting basic needs to ease the cost of living. Food, healthcare, and education—three of the biggest areas of household spending—will no longer attract VAT.
Other essentials such as rent, transportation, renewable energy, compressed natural gas (CNG), baby products, and sanitary items are also covered under the exemption list. Combined, these items make up more than 80% of the average Nigerian household’s expenses, and almost 100% for low-income families.
“These reforms are designed to protect the most vulnerable and ensure Nigerian workers can better meet their daily needs,” Oyedele said.
Beyond tax relief on income and goods, the reform bills also include incentives aimed at stimulating employment and making wage increases easier. Wage awards and transport subsidies will receive tax breaks, while previously burdensome bureaucratic restrictions on salary adjustments have been removed.
The reforms cap the taxable value of benefits-in-kind—non-cash perks like accommodation or company vehicles—allowing employees to retain more of their earnings. Affordable housing will also get a boost through VAT and stamp duty exemptions on low-cost rental payments and real estate purchases.
To support job creation, employers will benefit from tax incentives for hiring, and the bills also propose a more attractive tax structure for Nigerians engaging in remote work with international companies.
“These changes deserve the backing of all stakeholders, especially those championing the interests of workers,” Oyedele noted, urging labour unions like the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) to support the initiative.
The House of Representatives passed four key tax reform bills in March 2025 after months of extensive deliberations and revisions. The bills, first introduced by the Executive in October 2024, are now awaiting approval from the Senate. Once passed, they will be forwarded to President Bola Tinubu for assent.
With the reforms set to reduce tax burdens, stimulate job creation, and protect low-income families, Nigeria is preparing to usher in a more equitable and worker-friendly economic environment.
If implemented as proposed, these measures could mark a significant step toward rebuilding public trust in the tax system and ensuring that the economy works better for everyone.
