PAYE Cut Increases Workers’ Take-Home Pay In January — Oyedele

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has announced that Nigerian workers are beginning to reap the benefits of recent tax reforms, with many reporting higher take-home pay in their January salaries due to reduced Pay As You Earn (PAYE) deductions.

In a post on X (formerly Twitter) on Monday, Oyedele shared positive feedback from employees who have already received their January 2026 salaries, noting that the new tax laws are easing the financial burden on salary earners whose taxes are deducted directly at source. “We are pleased to note the feedback from workers who have received their salaries for January 2026 and confirmed a reduction in their PAYE tax resulting in higher take-home pay under the new tax laws,” Oyedele stated.

The development comes amid the federal government’s rollout of comprehensive tax reforms aimed at boosting disposable income, stimulating economic growth, and streamlining tax administration across the country. Oyedele emphasized that the drop in PAYE deductions is an early indicator of the reforms’ effectiveness in reducing workers’ tax obligations, particularly for those with employer-deducted income taxes.

Background on the Tax Reforms

The reforms are grounded in the Nigerian Tax Act (NTA) and the Nigerian Tax Administration Act (NTAA), which took effect from January 2026. These laws build on earlier implementations, including the Nigerian Revenue Service Establishment Act and the Joint Revenue Service Establishment Act, which began in June 2025. Key features include making the first ₦800,000 of annual income tax-free, introducing rent relief (up to 20% of rent paid), and eliminating the old Consolidated Relief Allowance (CRA).

According to Oyedele, approximately 98% of Nigerian workers will either pay no PAYE tax or lower amounts under the new framework, especially those earning ₦250,000 or less monthly. Additionally, 97% of small businesses are exempt from corporate income tax, value-added tax (VAT), and withholding tax, while large companies will also see reduced liabilities. “The reforms are structured to ensure Nigerians pay less tax overall while improving compliance and efficiency,” Oyedele added.

To support implementation, the Presidential Committee is collaborating with the Joint Revenue Board to host a webinar on January 28, 2026, targeted at HR directors, payroll managers, CFOs, and tax managers to ensure proper application of the changes.

Public Reactions and Implications

Early reactions on social media have been mixed but largely positive. Some users, like X user @jeffphilips1, have shared testimonies of salary increments due to the PAYE cuts, stating, “I’m now seeing people testifying about increment in their January net pay because of reduction in PAYE.” Others, however, have raised concerns about the overall tax burden when factoring in VAT and other charges, with detailed breakdowns showing potential deficits for average earners despite the relief.

Experts suggest the reforms could lead to increased disposable income for workers, potentially spurring consumer spending and economic growth. However, controversies over alleged alterations to gazetted legislation have sparked debates, though Oyedele maintains the framework’s fairness.

As Nigeria navigates these changes, stakeholders are encouraged to participate in upcoming sessions to address any implementation challenges.