New Tax Law: 4 Groups of Nigerians Who Won’t Pay Personal Income Tax in 2026

Nigeria’s new tax rules took effect from January 1, 2026, with the government saying the changes are meant to reduce pressure on low-income earners, give relief to middle-income workers, and make the tax system fairer.

Officials also say the reform is designed to encourage more people to comply with tax rules while protecting vulnerable households.

Four categories exempted from personal income tax

Under the updated PAYE (personal income tax) framework, the following groups are expected to enjoy exemptions or special relief:

1) Workers earning the national minimum wage or less
People earning the minimum wage (or below) are exempt from personal income tax.

2) Nigerians earning up to ₦1,200,000 gross income yearly
This group, often described as low-income earners, will not pay personal income tax under the revised rules. Reports explain that this roughly aligns with about ₦800,000 taxable income after allowable deductions.

3) Middle-income earners up to ₦20 million yearly (tax relief, not full exemption)
People earning up to ₦20 million per year are expected to benefit from reduced PAYE rates, meaning they may still pay tax, but at lower effective rates compared to what applied before.

4) Gifts (not taxed)
The new rules also treat gifts as exempt from taxation, meaning receiving a genuine gift should not attract personal income tax.

Why government introduced these exemptions

Government officials say the goal is to protect low-income Nigerians, improve fairness by reducing burdens on struggling households, and still keep the system strong enough to fund public services.

Analysts also believe that lighter tax pressure on workers could increase disposable income and reduce financial strain, especially as living costs remain high.