Nigerian workers across the public and private sectors say tax reform salary gains reflected in their January 2026 payslips remain marginal, despite government assurances that recent PAYE cuts would significantly boost disposable income.
Interviews conducted in Lagos, Abuja and other major cities indicate that while some employees recorded slight increases in net pay, the amounts were largely insufficient to offset rising food prices, transportation costs and housing expenses.
A banker based in Lagos said his take-home pay rose by about ₦5,000, describing the increase as “barely noticeable” against monthly inflation pressures. A state civil servant noted that the effect of the PAYE adjustment was difficult to isolate due to partial payment of allowances, adding that expectations of meaningful relief had not been met.
Tax reform salary gains vary by income band
Economists say the uneven outcomes are linked to the structure of the tax reforms. Under the new framework, income up to ₦800,000 annually is exempt from personal income tax, while progressive rates apply beyond that threshold.
As a result, lower-income earners may see limited but positive adjustments, while higher earners experience smaller gains or none at all, depending on payroll implementation and relief claims.
Several workers also complained that deductions appeared unchanged, raising concerns about compliance by employers and understanding of the new tax rules.
Cost pressures dilute PAYE benefits
Analysts warn that even where PAYE reductions apply correctly, broader economic conditions are undermining the intended benefits. Rising energy costs, food inflation and banking charges are quickly eroding the modest salary gains recorded by workers.
Policy experts say sustained impact will depend on tighter inflation control and clearer enforcement of payroll tax rules across organisations.
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Labour advocates have called on authorities to improve engagement with employers and workers to ensure proper implementation and transparency, noting that tax reform alone may not be sufficient to ease household financial pressure.
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