By Danjuma Amodu | January 9, 2026
The Federal Government has officially confirmed that Nigerians earning up to ₦800,000 annually, including those on minimum wage, will pay zero personal income tax under the new tax regime effective January 1, 2026.
Director-General of the Budget Office of the Federation, Tanimu Yakubu, yesterday dismissed claims that low-income workers would be taxed, calling such reports “stage-managed arithmetic” and “misrepresentation of the law” circulated by critics seeking to discredit the policy.
Yakubu emphasized that the first ₦800,000 of annual income is taxed at 0%, a provision he described as “the hinge” of the reform replacing the old system that lumped low earners into taxable brackets without adequate relief.
Using a practical example, Yakubu explained.
“Take Joseph, who earns
₦75,000 monthly — ₦900,000 annually. Under the new law, the first ₦800,000 attracts 0% tax. Only ₦100,000 is potentially taxable. At 15%, that’s ₦15,000 per year — but after deducting pension contributions (8% = ₦72,000), taxable income drops to ₦28,000. Tax becomes ₦4,200 per year (₦350/month). Add health insurance or other deductions — and Joseph pays zero tax.”
Yakubu accused critics of committing “category errors” by treating pension contributions and health insurance premiums as taxes when they are, in fact, deferred wages and purchased benefits owned by the worker.
He also rejected comparisons to global poverty lines, noting the World Bank’s $4.20/day PPP metric cannot be directly converted to naira for tax policy purposes calling such usage “political talking points” rather than economic analysis.
On claims that “widening the tax base” targets the poor, Yakubu said.
“Widening the tax base can mean bringing non-compliant high earners into the system, closing loopholes, capturing affluent segments of the digital and informal economy, not taxing subsistence wages.”
He added that Nigeria’s real fiscal challenge is a weak tax-to-GDP ratio and over-reliance on borrowing problems the reforms aim to fix without burdening low-income workers.
Yakubu singled out an essay by Emmanuel Orjih, saying it relied on “emotional framing and selective accounting” to create a false narrative ignoring the zero-rate threshold and deductions to protect low earners.
“The outrage depends on omitting the very thresholds that make its conclusion collapse,” Yakubu said. “The new structure explicitly protects low incomes. Claims to the contrary are driven more by narrative devices than arithmetic grounded in law.”
