Tax Reform: Low Income Earners to Pay Zero Tax from 2026, Says EKIRS

Gbenga Sodeinde In Ado Ekiti 

The Executive Chairman of Ekiti State Internal Revenue Service (EKIRS), Mr. Olaniran Olatona, has clarified key provisions of the National Tax Reform Acts, assuring residents that low-income earners have nothing to fear as implementation begins on January 1, 2026.

Speaking at a press conference in Ado-Ekiti on Wednesday, Olatona explained that individuals earning below N800,000 annually will be exempted from payment of personal income tax under the new law. 

He clarified that the exemption covers both salaried workers and self-employed individuals whose combined income from business, rent or other sources does not exceed the threshold.

However, he noted that only taxpayers under the Pay As You Earn (PAYE) scheme would enjoy the full exemption in year 2026 because taxpayers who earned income from trade, business and other sources are assessed on the preceding year basis. 

Thus, taxpayers under Direct Assessment Scheme would still be assessed with the current tax rates under PITA for income earned in 2025, which would be payable in 2026.

According to him, all income earned in year 2025 will still be assessed based on the current law which has no exemption. 

The full tax exemption for low-income earners other than those earning only employment income, will practically commence  in 2027 Year of Assessment when tax for income earned in year 2026 will be due and payable.

Olatona stressed that EKIRS would continue to engage informal sector operators but reassured petty traders and small business owners that most would automatically qualify for zero tax, as the law effectively exempts those earning below N1 million annually if allowable deductions are considered.

Addressing public concerns, the EKIRS boss debunked claims that bank accounts without Tax Identification Numbers (TIN) would be frozen, describing such reports as false. 

He explained that TIN would only be required for opening new bank accounts by businesses and income earners while existing accounts remain unaffected.

He also disclosed ongoing efforts with the Joint Revenue Board to harmonise multiple tax identification numbers into a single Tax ID linked to the National Identification Number (NIN), a move aimed at ensuring every taxable person has a single unique Tax ID which can be used across all states of the federation.

Olatona emphasised that the reform is not designed to increase the tax burden on citizens but to widen the tax base by bringing high-income earners and previously untaxed individuals into the system.

He added that taxpayers who feel unfairly treated can seek redress through the Office of the Tax Ombud, an independent office established under the Joint Revenue Board (Establishment) Act, to resolve disputes through mediation, make recommendations to the tax authorities, institute proceedings on behalf of taxpayers when necessary and protect taxpayers’ rights generally.

“The era we are in now is voluntary compliance,” he said, adding that EKIRS suspended enforcement actions since July 2025 to simulate the impact of the new law ahead of its full implementation. 

He noted that much reliance will be placed on data rather than muscle for enforcement going forward.

The EKIRS chairman urged residents to remain calm, cooperate with authorities, and take advantage of available tax reliefs, noting that the reforms are critical to sustaining government revenue, improving economic stability and promoting ease of doing business.

https://meet.google.com/call?authuser=0&hl=en&mc=KAIwAZoBFDoScGludG9faHBxanV2M3BsN3I2ogE7GgIQADICUAA6AhABSgQIARABWgIIAGoCCAFyAggBegIIAogBAZIBAhABmgEEGAEgAKIBAhAA4gECCACyAQcYAyAAKgEwwgECIAHYAQE&origin=https%3A%2F%2Fmail.google.com&iilm=1766030363990