Tax Relief for Low-Income Earners in Nigeria: Zero Personal Income Tax from 2026

The Executive Chairman of the Ekiti State Internal Revenue Service (EKIRS), Mr. Olaniran Olatona, has clarified the key provisions of the National Tax Reform Act, assuring residents that low-income earners will be exempt from paying personal income tax starting January 1, 2026.

Olatona explained that individuals earning below N800,000 annually, including both salaried workers and self-employed persons, will qualify for the tax exemption, provided their total income from business, rent, or other sources does not exceed this threshold.

He noted, however, that in the first year of implementation, only taxpayers under the Pay-As-You-Earn (PAYE) scheme will fully benefit from the exemption. Those under the Direct Assessment Scheme, who are assessed based on the previous year’s income, will continue to pay taxes on 2025 earnings according to current rates. Full exemption for these taxpayers will begin in 2027 for income earned in 2026.

Olatona reassured informal sector operators, petty traders, and small business owners that most will automatically qualify for zero tax, as the law effectively exempts those earning below N1 million annually after allowable deductions.

Addressing public concerns, he dispelled rumors that bank accounts without Tax Identification Numbers (TIN) would be frozen, stating that TINs are only required for opening new accounts by businesses and income earners, while existing accounts remain unaffected.

He also highlighted ongoing efforts to harmonize multiple TINs into a single Tax ID linked to the National Identification Number (NIN). This initiative is aimed at ensuring every taxable person has a unique, nationwide Tax ID usable across all states.

Olatona emphasized that the tax reform is intended to widen the tax base by bringing high-income earners and previously untaxed individuals into the system, rather than increasing the burden on citizens. Taxpayers who feel unfairly treated can seek resolution through the Office of the Tax Ombud, an independent body that mediates disputes, recommends corrective action, and protects taxpayers’ rights.

“The era we are in now is voluntary compliance,” Olatona said, noting that EKIRS suspended enforcement actions since July 2025 to assess the impact of the new law. Going forward, enforcement will rely more on accurate data rather than force.

He urged residents to remain calm, cooperate with authorities, and take full advantage of the available tax reliefs, emphasizing that these reforms are crucial for sustaining government revenue, improving economic stability, and promoting ease of doing business in Ekiti State.