Nigerian workers are seeing an increase in take-home pay due to reduced Pay As You Earn (PAYE) deductions under the newly implemented tax laws. According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, early indications suggest that the new tax framework is easing the tax burden on workers, particularly salary earners whose taxes are deducted at source.
Oyedele referenced feedback from employees who received their January 2026 salaries, noting that the drop in PAYE deductions reflects the early impact of recently enacted tax reforms. He stated that the committee is pleased to note the feedback from workers who have confirmed a reduction in their PAYE tax, resulting in higher take-home pay under the new tax laws.
The reforms are particularly beneficial for employees whose income taxes are deducted directly by their employers. Despite reports of reduced PAYE deductions, Oyedele emphasized that further engagement is needed to ensure correct implementation. To address this, the committee is partnering with the Joint Revenue Board to host a dedicated engagement session for key stakeholders involved in payroll and tax administration.
The online session, scheduled for this week, will focus on applying the new Personal Income Tax provisions correctly. It is targeted at HR Directors, Payroll Managers, Chief Financial Officers, Tax Managers, and other senior executives. The session aims to address implementation gaps and clarify compliance requirements for employers, ensuring that employees fully benefit from the reforms while employers remain compliant with the updated legal framework.
The development follows the federal government’s commencement of tax reforms implementation, aimed at improving disposable income, supporting economic growth, and simplifying tax administration across the country. The reforms were introduced to simplify Nigeria’s tax system, reduce multiple taxation, and promote fairness across income groups.
Oyedele previously stated that about 98% of Nigerian workers will either pay no PAYE tax or pay lower taxes under the new framework. Additionally, approximately 97% of small businesses will be exempt from corporate income tax, value-added tax, and withholding tax. The reforms are structured to ensure Nigerians pay less tax overall while improving compliance and efficiency.
The implementation of the new tax laws began in January, despite controversies surrounding alleged alterations to gazetted copies of the legislation. The federal government had previously implemented two other laws: the Nigerian Revenue Service Establishment Act and the Joint Revenue Service Establishment Act, which commenced on June 26, 2025. As the new tax framework continues to roll out, it is expected to have a significant impact on the country’s economy and workforce.
