Nigerian workers tax reforms deliver only marginal pay increases for many employees, prompting mixed reactions across public and private sectors

Nigerian workers across the public and private sectors expressed muted and largely underwhelming reactions on Monday after receiving January salaries reflecting newly implemented Personal Income Tax reforms, with many employees reporting only marginal increases in take-home pay.

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The tax reforms, signed into law earlier this year, exempt individuals earning the national minimum wage or less from personal income tax and remove tax obligations for employees earning up to N1.2m in annual gross income, equivalent to about N800,000 in taxable earnings.

The measures also reduce Pay-As-You-Earn deductions for those earning up to N20m annually and exempt gifts from taxation.

Despite the changes, several workers says the financial impact was limited.

Adetunji Morgan, a banker based in Lagos, said his salary increased by about N5,000 following the adjustment, describing the difference as noticeable but modest.

A Lagos State civil servant, Adedayo Lawal, said it was difficult to isolate the effect of the PAYE reduction without a detailed review of his payslip, noting that a partially paid Yuletide allowance further complicated the calculation.

He added that he was not expecting a significant increase.

Employees in the private sector echoed similar sentiments.

Tolulope Ifeanyi, who works in financial services, described the increment as minimal, while media practitioner Joshua Austin said the increase was largely symbolic and insufficient to meaningfully offset rising living costs.

For Uchechi Nwankamma, a contract staff member at Access Bank in Lagos earning between N200,000 and N250,000 monthly, the change offered slight relief.

She said her take-home pay was marginally higher and helped cover some day-to-day expenses, though it did not amount to a major shift.

Interviews conducted, indicated that salary increases ranged from N6,000 and N5,000 to as little as N3,000, N1,443 and even N400, reinforcing the perception that the benefits of the Nigerian workers tax reforms were limited in scope.

Reacting to the feedback, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said the committee had received confirmations from workers who recorded reductions in PAYE deductions.

In a post on his verified X account on Monday, Oyedele described the feedback as encouraging and said the reforms were beginning to translate into higher net pay.

Taiwo Oyedele added that the committee, in collaboration with the Joint Revenue Board, would host an engagement session with human resources directors, payroll managers and chief financial officers on Wednesday to ensure proper understanding and implementation of the new tax laws.

However, responses in the comment section of the post suggested uneven outcomes.

Some workers complained of higher deductions and reduced net pay, with several users questioning the uniformity of the reform’s impact.

Providing context, PwC Partner for Tax Reporting and Strategy Kenneth Erikume explained that the graduated tax structure meant income up to N800,000 was now exempt, with progressive rates applying thereafter and income above N50m taxed at 25 per cent.

He said employees earning below N25m annually were more likely to benefit, while those above that threshold could face higher tax obligations.

Developmental economist Dr Aliyu Ilias warned that early implementation raised concerns about the overall burden on households, citing additional charges on banking and digital transactions that could erode expected gains.

He described the situation as an unfortunate reality and urged lawmakers to review emerging distortions as the reforms take effect.

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Despite lingering concerns and earlier legislative controversies surrounding the laws, the government has maintained that the reforms are essential to boosting disposable income and streamlining tax administration, insisting that the long-term benefits will outweigh short-term frustrations.