The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has clarified that under the newly enacted tax legislation, Nigerian households with monthly earnings of ₦250,000 or less will be exempted from taxation, as they fall within the category of the economically disadvantaged.
Oyedele, a former tax executive at PriceWaterhouseCoopers (PwC), made this disclosure during an interview on Channels Television’s Politics Today on Thursday, shortly after President Bola Tinubu signed four tax-related bills into law.
Reflecting on his leadership of the committee since his appointment by the President in July 2023, Oyedele described the two-year reform process as both significant and demanding.
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According to him, the primary goal of the new tax policies, which are scheduled to become effective from January 2026, is not to impose higher tax rates but rather to stimulate growth in the economy and improve the identification of individuals and entities evading taxation.
He emphasized that the revised laws are intended to safeguard small businesses and prevent taxation of those living in poverty. The framework, he explained, is designed to be efficient, inclusive, and growth-oriented.
“This tax law will not give you cash in your pocket, but at least it won’t take your cash away if you are poor,” Oyedele stated.
He further elaborated that individuals earning less than ₦250,000 per month would not be subject to income tax, as such earnings are insufficient to meet basic living expenses.
“We have eliminated the tax component for people at the bottom, we have reduced for people at the middle, and we have increased slightly for people at the top,” he explained.
According to Oyedele, middle-income earners—defined as those earning between ₦1.8 million and ₦2 million monthly—will see a reduction in their tax burden, although not a total exemption. He noted that this group comprises roughly 5% of Nigeria’s population.
To determine the income level at which tax exemptions should apply, Oyedele said the committee engaged in extensive debate over the definition of poverty within the Nigerian context.
“We debated this question; we said: ‘Who is a poor person in Nigeria?’” he recounted.
He pointed out that conventional global poverty benchmarks, such as the World Bank and UN threshold of $2.15 per day, did not fully account for the realities of rural Nigeria, where many people survive through subsistence farming and do not rely on cash for daily expenses. “I lived and grew up in the village,” Oyedele said, sharing his personal experience to underscore the need for a localized understanding of poverty.
The committee, he explained, developed its own poverty threshold based on the average Nigerian household, which typically consists of five members with two breadwinners.
“We came up with a ₦120,000 or ₦130,000 per two people working in a household of five. If the earnings are about ₦250,000, 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,” he said.
He added that this calculation served as the foundation for determining the exemption threshold under the new tax system.
Oyedele also highlighted the inefficiencies in Nigeria’s current tax system, revealing that the country is presently collecting only about 30% of its potential tax revenue. He noted that one of the principal objectives of the reform is to address this significant shortfall and reduce the existing 70% revenue gap.
