Nigerian workers are beginning to feel the impact of the Federal Government’s new tax reforms, as deductions under the Pay As You Earn (PAYE) system reduced in January 2026, leading to higher take-home pay for many salary earners.
This was disclosed on Monday by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, who said early feedback from workers showed that the new tax laws are already easing the financial burden on employees.
Oyedele shared the update in a post on X (formerly Twitter), where he revealed that workers who had received their January salaries confirmed lower PAYE deductions and improved net income.
“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 said.
According to him, the early outcome is a positive sign that the government’s tax reforms are beginning to achieve their purpose, especially for workers whose taxes are deducted directly by their employers.
The PAYE system is the method through which personal income tax is deducted monthly from workers’ salaries and paid to the government by employers. It applies mainly to public servants and private sector workers in formal employment.
For years, many Nigerian workers have complained that PAYE deductions significantly reduced their monthly income, especially at a time when inflation, fuel prices, food costs, and transportation expenses have continued to rise.
The new tax reforms, recently signed into law, are part of a wider effort by the Federal Government to reform Nigeria’s tax system, increase disposable income, encourage spending, and stimulate economic growth.
Oyedele explained that the reduction in PAYE deductions is one of the earliest visible effects of the reforms, which were designed to reduce the tax burden on low- and middle-income earners while improving tax administration.
He noted that workers who earn fixed monthly salaries and have their taxes deducted at source are among the first to feel the impact of the changes.
“These reforms are particularly beneficial for employees whose income taxes are automatically deducted by their employers,” he said.
The Presidential Fiscal Policy and Tax Reforms Committee was set up to review Nigeria’s tax structure and recommend changes that would make the system fairer, simpler, and more efficient. The committee has worked closely with relevant government agencies to develop laws aimed at improving compliance while reducing hardship for citizens.
Under the new tax laws, adjustments were made to tax bands, reliefs, and deductions, allowing workers to keep more of their earnings. While full details of the changes vary depending on income level, the overall goal is to leave workers with more money in their pockets at the end of the month.
“With more money to spend, workers can better meet their basic needs and support local businesses,” an economist said. “This could help boost economic activity, especially in urban areas.”
Many workers have welcomed the development, describing it as a small but important relief in difficult economic times. Some salary earners said the difference in their January pay, though not massive, was noticeable and encouraging.
“I saw a slight increase in my take-home pay this month,” a civil servant in Abuja said. “With how expensive everything is now, every extra naira matters.”
Another worker in the private sector said the reduction showed that the government was beginning to listen to the concerns of workers.
“We have been complaining for years about taxes and deductions,” he said. “This is a good step, even though more still needs to be done.”
Nigeria has faced economic pressure in recent years due to rising inflation, subsidy removal, currency reforms, and high living costs. These factors have reduced the purchasing power of many households, making tax relief a welcome development.
The Federal Government has argued that tax reforms are necessary not only to support workers but also to improve revenue collection in a fair and sustainable way. Officials say the aim is to broaden the tax base rather than overburden those already paying taxes.
Oyedele stressed that the reforms are not about reducing government revenue at the expense of development, but about creating a balanced system that supports growth.
“A fair tax system should support workers, encourage productivity, and still provide funds for public services,” he said in earlier comments on the reform agenda.
He added that the government is also working to ensure that the tax system is easier to understand and comply with, especially for small businesses and individual taxpayers.
In Nigeria, tax compliance has remained a challenge, with a large informal sector and limited trust in how public funds are used. Experts say reforms that improve transparency and fairness could encourage more people to pay taxes willingly.
The January PAYE reduction is expected to be followed by other changes as the full implementation of the new tax laws continues across the country. State governments, which receive PAYE revenue, are also expected to align with the reforms.
Meanwhile, labour unions have said they will continue to monitor the situation to ensure that workers are not short-changed. Union leaders have repeatedly called for policies that improve wages, reduce deductions, and protect workers from economic hardship.
As more workers receive their salaries in the coming months, the true impact of the PAYE reduction is expected to become clearer. For now, the early signs suggest that the reforms are beginning to make a difference.
For many Nigerian workers, the increase in January take-home pay offers a measure of hope that economic policies can translate into real benefits at the household level.