Tax reforms: Workers unimpressed with marginal salary rise

Some employees have shared their varied and generally unimpressed responses to the recent adjustments in their take-home pay following the introduction of new Personal Income Tax reforms, with numerous individuals indicating that the increments are minimal and not substantial enough to effectively ease financial burdens.

As reported by The PUNCH, the revised tax laws bring several modifications to the Personal Income Tax framework. Those making the national minimum wage or less are now exempt from personal income tax, and workers with an annual gross salary of up to N1.2 million, which translates to around N800,000 in taxable income, are also exempt. Additionally, the reforms offer a reduced Pay-As-You-Earn tax for individuals earning up to N20 million per year and exclude gifts from taxation.

In spite of these updates, many workers informed The PUNCH on Monday that the effect on their paychecks has been slight. A banker named Adetunji Morgan reported that his pay increased by approximately N5,000 after the adjustment. “Yes, my salary went up. I believe it went up by nearly N5,000,” he remarked.

Adedayo Lawal, a civil servant in Lagos State, mentioned that it was challenging to ascertain the specific influence of the PAYE discount on his income without looking at his payslip. He noted that a holiday bonus received in December made it harder to evaluate. “In December, we received a holiday allowance, but we only got half of it, with the promise that the remaining portion will be paid this month,” he explained, adding that he did not anticipate a notable increase.

Likewise, Tolulope Ifeanyi, a worker in the financial services industry, characterized the raise as trivial. “Mine went up, oh, just a tad, sha,” she stated.

For media professional Joshua Austin, the increment felt more symbolic than significant. “My salary has increased, yet it’s not sufficient to buy me shawarma for a single evening,” he expressed, pointing out that a wrap of his favorite shawarma is priced at N2,500. “Regarding the increase, yes, it has gone up, but what does that increase really mean?”

A verified user on X, Gabriel Bolatito, also recognized the minor adjustment, indicating that although the PAYE reduction was small, it met previous expectations and led to a slight net increase.

“I got my salary last week, and my take-home pay is a bit more than it was before. It’s not a major change, but it does assist in covering some of the rising living expenses,” noted Uchechi Nwankamma, a contract worker at Access Bank in Lagos earning between N200,000 and N250,000 monthly.

From a range of employees surveyed by The PUNCH from both public and private sectors, reported salary increases ranged from N6,000 and N5,000 to as little as N3,000, N1,443, and even N400.
Responding to the comments, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, mentioned that the panel had obtained confirmations from employees who observed decreases in their PAYE tax. On Monday, in a message posted on his X (previously Twitter) account, Oyedele stated, “We are happy to acknowledge the responses from employees who have received their January 2026 paychecks and verified a decrease in their PAYE tax, leading to an increased net income under the updated tax regulations.”

He continued by stating that the committee, in partnership with the Joint Revenue Board, plans to conduct an engagement session for HR directors, payroll managers, chief financial officers, tax managers, and other high-level officials in charge of employee remuneration and payroll tax adherence. Scheduled for Wednesday, the session's purpose is to ensure a clear comprehension and execution of the reforms, he elaborated.

Nevertheless, reactions found in the comments of Oyedele’s post indicated that not every employee benefited as intended from the changes. Several users expressed frustration over increased tax deductions alongside a decline in their net earnings. Rasha (@rasha2you) remarked, “Why has my take-home decreased? Please stop pretending that everyone is paying less tax.” Another individual, ‘Odogwu’ Michael, noted that his tax burden rose despite his income barely covering essential expenses, while High Bee (@ibukun36180571) indicated that there was no decrease in his tax rate and mentioned that his salary had diminished.

In response to worries about workers who might see a drop in their net earnings, Kenneth Erikume, a Partner in Tax Reporting and Strategy at PwC, clarified the effects of the graduated tax system during the 2026 Nigeria Economic Outlook event organized by FirstBank. He pointed out that earnings up to N800,000 are now tax-free, with progressively applied tax rates beyond that threshold, and income exceeding N50 million taxed at 25 percent.

Erikume explained that, assuming no significant deductions are claimed, individuals with annual earnings under N25 million are likely to enjoy an increase in take-home income due to lower taxes, whereas those making over N25 million will encounter greater tax liabilities and reduced net earnings. He emphasized that companies must consider how to navigate this disparity with regard to their workforce.

“Employees earning below N25 million will retain this advantage, and it cannot be taken back. However, for those earning above N25 million, the challenge will be whether the organization will take on part of the added tax burden through a payroll revision that aligns with this adjustment,” he stated, underscoring that modifications to payroll are an urgent matter that organizations need to resolve promptly.

Dr. Aliyu Ilias, a developmental economist, commented that the policy was initially framed as progressive, but its early execution seems to suggest otherwise.

“Recent events, especially fees on USSD transactions and other banking services, indicate that a 7.5 percent levy is being imposed on various levels,” Ilias told The PUNCH.

“This indicates that the policy may actually have adverse effects on individuals. Those who altered their spending habits in expectation of lower costs are now confronted with heightened fees, which could pressure household budgets and diminish their purchasing power.”

The reforms sparked significant debate. Legislators had voiced concerns about inconsistencies between the officially published laws and their parliamentary versions, leading to the need for official clarifications and certified publications. In spite of these apprehensions, the government moved forward, emphasizing that these measures are crucial for increasing disposable income and reducing inefficiencies in tax collection processes.

Ilias characterized the scenario as “an unfortunate reality,” suggesting that the National Assembly could revise the framework to rectify the emerging issues.