As Nigeria prepares to implement a new tax regime from January 2026, confusion, fear and misinformation have flooded social media and workplace discussions. Claims ranging from “massive salary cuts” to “new taxes on all allowances” have left many Nigerian workers worried about their financial future.
However, a closer look at the new tax law shows that while changes are coming, several widely circulated claims are exaggerated or outright false.
Background to the New Tax Law
The new tax law is part of the Federal Government’s broader effort to reform Nigeria’s tax system, widen the tax base, improve revenue generation, and strengthen compliance. Authorities argue that Nigeria’s tax-to-GDP ratio remains one of the lowest in Africa, making reforms necessary to fund infrastructure, social services and public welfare.
To allow for a smooth transition, the government set January 2026 as the effective date, giving employers, workers and tax authorities time to adjust payroll systems and compliance structures.
The Truth: What the Law Actually Changes
One of the major changes affects the Pay-As-You-Earn (PAYE) system used to tax workers’ salaries. The law updates income tax brackets, allowable deductions and compliance procedures, with the stated goal of making taxation more progressive.
Low- and middle-income earners are expected to benefit from clearer reliefs and deductions, while higher earners may see adjustments in how their taxable income is calculated.
The law also strengthens rules around pension contributions, placing stricter obligations on employers to remit deducted pension funds promptly. This is aimed at ending the long-standing problem of workers discovering years later that their pension deductions were never paid into their Retirement Savings Accounts.
In addition, the Federal Inland Revenue Service (FIRS) and state tax authorities are granted enhanced enforcement powers, including improved audit systems, digital tracking of payments, and stiffer penalties for tax evasion or false declarations.
The Lies and Misconceptions
Contrary to widespread claims, the new law does not impose a blanket increase in tax rates on all workers. There is no provision stating that Nigerian workers will suddenly lose half of their salaries to tax deductions.
Equally false are reports that all tax reliefs and allowances have been scrapped. While some reliefs have been redefined or clarified to reduce abuse, many remain in place.
Another misleading claim is that the new tax law will automatically lead to mass job losses. Experts say employment decisions will still depend on economic conditions and company policies, not the tax law itself.
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