The Federal government has announced a new set of 50 tax exemptions and reliefs that will take effect from January 1, 2026.
The plan, led by the Presidential Fiscal Policy and Tax Reforms Committee, aims to reduce the tax burden on low-income earners, average taxpayers, and small businesses across Nigeria.
The chairman of the committee, Taiwo Oyedele, said the policy is part of the government’s broader effort to make the tax system more balanced, fair, and easy to understand. The new framework seeks to protect the poor and encourage economic activities that can boost productivity and business growth.
Under the reform, individuals earning the national minimum wage or less will be fully exempt from paying personal income tax. Workers earning up to N1.2 million annually will also enjoy complete tax relief, while those earning up to N20 million per year will benefit from reduced tax rates. Pension contributions, health insurance, and housing fund payments will remain tax-deductible, while other deductions such as interest on home loans and rent reliefs up to N500,000 will apply.
The reform also covers retirees, as pensions, gratuities, and other retirement benefits will not be taxed. Compensation for job losses up to N50 million will also be exempt. Capital gains from the sale of personal homes, two private cars each year, and personal belongings valued below N5 million will not attract tax. Share gains below N150 million annually or N10 million per transaction will also qualify for relief, especially if reinvested.
Small companies with a yearly turnover below N100 million or fixed assets not above N250 million will pay no company income tax. Startups that meet government criteria will also be exempt, while agricultural enterprises involved in crop or livestock production will receive a five-year tax holiday. Businesses that increase salaries or provide transport support to low-income workers will qualify for a 50 percent compensation relief.
The reform further exempts small companies from development levies and withholding taxes on their income and payments to suppliers. In the area of Value Added Tax (VAT), essential items such as food, rent, books, health care, and medicines will remain VAT-free. Small businesses with less than N100 million annual revenue will not charge VAT. Items such as baby products, disability aids, sanitary products, electric vehicles, and humanitarian supplies will also enjoy VAT exemption.
Electronic transfers below N10,000, salary payments, and intra-bank transfers will not attract stamp duties under the new framework.
The reform also covers retirees, as pensions, gratuities, and other retirement benefits will not be taxed. Compensation for job losses up to N50 million will also be exempt. Capital gains from the sale of personal homes, two private cars each year, and personal belongings valued below N5 million will not attract tax. Share gains below N150 million annually or N10 million per transaction will also qualify for relief, especially if reinvested.
Small companies with a yearly turnover below N100 million or fixed assets not above N250 million will pay no company income tax. Startups that meet government criteria will also be exempt, while agricultural enterprises involved in crop or livestock production will receive a five-year tax holiday. Businesses that increase salaries or provide transport support to low-income workers will qualify for a 50 percent compensation relief.
The reform further exempts small companies from development levies and withholding taxes on their income and payments to suppliers. In the area of Value Added Tax (VAT), essential items such as food, rent, books, health care, and medicines will remain VAT-free. Small businesses with less than N100 million annual revenue will not charge VAT. Items such as baby products, disability aids, sanitary products, electric vehicles, and humanitarian supplies will also enjoy VAT exemption.
Electronic transfers below N10,000, salary payments, and intra-bank transfers will not attract stamp duties under the new framework.
Alongside the fiscal reliefs, the committee has also introduced a public education campaign to tackle misinformation about the new tax laws. The initiative encourages citizens to nominate social media creators who promote accurate information about the reforms for a new awareness programme.
The reform follows President Bola Tinubu’s signing of four major tax bills earlier this year, covering the Nigeria Tax Bill, the Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill. These laws are part of the administration’s broader plan to simplify tax processes and build a more transparent fiscal system.