Nigerians earning less than N250,000 monthly will no longer pay personal income tax, according to the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele. The exemption is part of a new set of tax laws signed into law by President Bola Tinubu on Thursday, June 26, 2025.

Speaking during an interview on Channels Television’s Politics Today, Oyedele explained that households earning below the threshold are now officially classified as poor and should not be taxed.

He said the new tax policy, which takes effect from January 1, 2026, is not designed to increase tax rates but rather to stimulate economic growth, enhance tax efficiency, and protect low-income earners from additional financial burdens.

Oyedele stated that the reforms are aimed at eliminating taxes for the lowest-income earners, reducing tax liabilities for those in the middle-income bracket, and slightly increasing taxes for high-income earners.

According to him, individuals earning between N1.8 million and N2 million monthly will see reduced tax rates, affecting approximately five percent of the population.

He noted that the committee used both national and global data to define poverty in the Nigerian context, settling on a benchmark of N250,000 per household per month. This estimate assumes an average Nigerian household consists of five people with two income earners.

He explained that the tax reform committee debated the national poverty line extensively, concluding that individuals or households earning less than the benchmark lack disposable income for taxation and should be exempt.

Oyedele added that Nigeria currently collects only about 30 per cent of potential tax revenues, and the new tax laws are intended to address the 70 per cent shortfall by improving compliance, reducing leakages, and ensuring the tax system is more equitable and inclusive.

He said, “We debated this question; we said: ‘Who is a poor person in Nigeria? First, we started with data like the World Bank and the UN will tell you two dollars, fifteen cents a day per person means you are at the poverty line but there are people who do not earn two dollars a day but they are not poor because they produce the food that they eat and they do not pay for transportation. I lived and grew up in the village.

“So, we had to factor that in. We drew our own (poverty) line for Nigeria on the basis of an average of five people per family: two people working if they are lucky, taking care of the five. When we did the maths, it gave us an amount, and that was what we used in determining the income below which nobody should pay taxes.

“We came up with a N120,000 or N130,000 per two people working in a household of five. If the earnings are about N250,000, they can take care of themselves. Of course, they are not going to have luxury, but at least they can take care of themselves. They are poor, and they shouldn’t pay taxes. When we did the maths, it gave us an amount, and that was what we used in determining the income below which nobody should pay taxes.”