PAYE Cut Boosts Workers’ Take-Home Pay in January — Oyedele
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has stated that Nigerian workers are beginning to experience higher take-home pay following recent reductions in Pay As You Earn (PAYE) deductions introduced under the country’s new tax laws.
Oyedele disclosed this in a post on social media platform X on Monday, citing feedback from employees who had already received their January 2026 salaries. According to him, early reports suggest that the revised tax framework is already easing the burden on salary earners, particularly those in the formal sector whose income taxes are deducted directly at source.
The PAYE reduction is part of a broader package of tax reforms rolled out by the federal government, aimed at increasing disposable income, stimulating economic activity, and simplifying tax administration across the country. The reforms are also intended to rebalance the tax system by providing relief to low- and middle-income earners while improving overall compliance.
“We are pleased to note the feedback from workers who have received their salaries for January 2026 and confirmed a reduction in their PAYE tax resulting in higher take-home pay under the new tax laws,” Oyedele said.
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He explained that employees on PAYE were among the earliest beneficiaries of the reforms because the adjustments were automatically reflected in payroll calculations. According to him, this has allowed workers to immediately feel the impact of the policy without needing to file additional claims or applications.
Oyedele further noted that the reforms were designed to reduce the tax burden for the majority of Nigerian workers, especially those earning modest incomes. He argued that much of the public opposition to the tax changes before implementation was driven by misinformation and fear, rather than a clear understanding of how the new structure would affect different income groups.
However, reactions from workers and members of the public have been mixed. While some employees confirmed seeing slight increases in their net pay, others described the changes as marginal, with increments ranging from a few hundred naira to a few thousand naira. Some workers also reported no increase at all, while a few claimed their take-home pay had reduced due to differences in salary structure, allowances, or how employers applied the new rules.
Critics argue that even where PAYE deductions have fallen, the relief is insignificant when compared to the sharp rise in the cost of living over the past year. Inflation, higher energy prices, increased transportation costs, and rising food prices have continued to erode purchasing power, leading some workers to question the real impact of the tax cuts.
Others have also raised concerns that while PAYE may have reduced for some formal sector workers, Nigerians in the informal sector remain largely excluded from the benefits. Analysts note that a significant portion of the population earns income outside the formal payroll system and continues to face multiple levies, fees, and indirect taxes at state and local government levels.
Supporters of the reforms, however, maintain that the PAYE cut represents a step in the right direction. They argue that tax policy reforms are typically incremental and that the January adjustments should be viewed as an early phase of a longer-term effort to create a fairer and more efficient tax system.
Oyedele has repeatedly emphasised that the reforms are not designed to be punitive, but rather to strike a balance between revenue generation and economic relief. He added that as implementation continues, further refinements may be made to address gaps, improve clarity, and ensure that the intended benefits reach a wider segment of the population.
As debates continue, January 2026 salaries have effectively become the first real test of the new PAYE regime, offering Nigerians a practical basis to assess whether the promised tax relief translates into meaningful improvements in their daily lives.