Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has clarified that Nigeria’s new 2026 tax reform law is aimed at protecting low‑income earners, increasing disposable income and encouraging investment, countering concerns that the overhaul would worsen the cost of living.
He made the remarks at the Cowry Quarterly Economic Discourse while explaining key features of the new tax regime.
The tax reforms, signed into law as part of a broader effort to modernise Nigeria’s fiscal landscape, take effect from January 1, 2026 and represent one of the most comprehensive overhauls of the country’s tax system in decades.
The reforms replace a fragmented tax regime with a more progressive and harmonised framework designed to support economic growth, formalise the informal sector and ease the burden on ordinary Nigerians.
Experts note that prior to reform, low‑income earners disproportionately bore the brunt of personal income tax, with roughly 96 per cent of personal income tax contributions coming from workers earning relatively low wages — a situation the new laws seek to correct.
Oyedele explained that under the new tax regime, small‑scale investors in the capital market are automatically exempt from capital gains tax if their total asset disposal proceeds do not exceed ₦150 million and gains are less than ₦10 million within 12 months. This automatic exemption applies without conditions attached.
He also stressed that the new law’s broader objectives include “stopping the taxation of poverty” by ensuring that those with limited capacity to pay are protected, and that higher‑income earners bear a fairer share of the tax burden.
Under the reforms, Nigerians earning the national minimum wage are fully exempt from personal income tax, with the threshold for taxable income significantly raised through allowable deductions and reliefs.
Oyedele noted that pension fund administrators and real estate investment trusts also enjoy tax exemptions when proceeds are reinvested, while high‑net‑worth individuals are only liable for capital gains tax when exiting investments permanently without reinvesting.
For low‑income workers and small investors, the reforms could deliver meaningful financial relief and enhanced incentives to participate in the formal economy. By lifting tax burdens and expanding exemption thresholds, the law aims to boost disposable income, especially for households earning modest wages or operating small businesses.
In practical terms, many Nigerians, particularly those earning below approximately ₦800,000 annually, are expected to see reduced or eliminated personal income tax liabilities under the new regime. This shift is intended to increase consumer spending power and support economic resilience amid longstanding fiscal challenges.
For investors and wealth creators, the capital gains tax exemptions could encourage reinvestment, liquidity and deeper engagement with Nigeria’s financial markets, potentially accelerating growth and attracting further domestic and foreign capital.
Oyedele’s explanation underscores that the 2026 tax reform law is not about imposing new burdens but restructuring Nigeria’s fiscal landscape to be fairer, more efficient and supportive of low‑income earners and small investors.
With broad exemptions and incentives, the reforms aim to lift more Nigerians out of disproportionate tax exposure while strengthening revenue capacity through enhanced compliance and economic expansion.
As implementation begins, clear communication and stakeholder engagement will be crucial to maximising the law’s intended benefits.
