By Joke Kujenya
WITH EFFECT from 1 January 2026, tax reliefs are coming for millions of Nigerians as the Federal Government confirmed that fifty exemptions and incentives under the new tax reform laws will commence.
The Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, said the measures are designed to reduce the financial burden on low-income earners and small businesses, while promoting fairness, compliance, and inclusive economic growth.
The committee made this known during a press briefing in Abuja, where Oyedele described the initiative as one of the most people-focused tax packages in the nation’s history.
According to him, the reforms aim to simplify Nigeria’s complex tax system and stimulate productivity across sectors affected by inflation and tight economic conditions.
The comprehensive package introduces wide-ranging exemptions across Personal Income Tax, Companies Income Tax, Value Added Tax, Withholding Tax, Stamp Duties, and Capital Gains Tax.
The committee also detailed a series of allowable deductions, reliefs, and incentives for individuals, employees, and businesses.
From 1 January 2026, the following fifty exemptions and reliefs will apply:
- Individuals earning the national minimum wage or less will be completely exempt from personal income ta
- Annual gross income up to N1,200,000, equivalent to about N800,000 taxable income, will attract zero tax.
- Reduced PAYE rates will apply to persons with annual gross income up to N20 million.
- Gifts received by individuals will be exempt from taxation.
Allowable deductions and personal reliefs remain intact, including:
5. Pension contributions made to Pension Fund Administrators.
6. National Health Insurance Scheme contributions.
7. National Housing Fund contributions.
8. Interest on loans taken for owner-occupied residential property.
9. Life insurance or annuity premiums.
10. Rent relief equivalent to 20 per cent of annual rent, up to N500,000.
Pensioners and retirees will also benefit under specific provisions:
11. Pension funds and assets regulated under the Pension Reform Act remain tax-exempt.
12. Pension, gratuity, or retirement benefits granted under the Pension Reform Act remain untaxed.
13. Compensation for loss of employment up to ₦50 million is exempt.
Capital Gains Tax (CGT) exemptions include:
14. Sale of an owner-occupied residential house.
15. Sale of personal effects or chattels valued up to N5 million.
16. Sale of up to two private vehicles per year.
17. Gains on shares below N150 million per year, or gains up to N10 million, will be exempt.
18. Reinvestment of proceeds from shares above the exemption threshold also qualifies for relief.
19. Pension funds, charitable bodies, and religious institutions operating on a non-commercial basis are exempt.
Under the Companies Income Tax (CIT) regime:
20. Small companies with turnover not exceeding N100 million and total fixed assets not above N250 million will pay 0 per cent tax.
21. Startups formally recognised by the government will qualify for full exemption.
22. Companies offering salary increments, wage awards, or transport subsidies to low-income workers will enjoy an additional 50 per cent deduction as compensation relief.
23. Firms hiring and retaining new employees for at least three years will enjoy 50 per cent employment relief.
24. Agricultural businesses, including crop production, livestock, and dairy operations, will receive a five-year tax holiday.
25. Gains realised by investors such as venture capitalists, private equity funds, accelerators, or incubators from investments in labelled startups will be exempt.
For the Development Levy:
26. Small companies are fully exempt from the 4 per cent development levy.
Withholding Tax reliefs include:
27. Small companies, manufacturers, and agricultural businesses are exempt from withholding tax on their income.
28. Small companies are exempt from withholding deductions on payments made to their suppliers.
Value Added Tax (VAT) reforms introduce wide exemptions and zero-rated categories:
29. Basic food items attract 0 per cent VAT.
30. Rent payments are VAT-exempt.
31. Education services and materials are VAT-free.
32. Health and medical services are VAT-exempt.
33. Pharmaceutical products are VAT-free.
34. Small companies with turnover not exceeding N100 million are exempt from charging VAT.
35. Diesel, petrol, and solar power equipment are VAT-exempt or enjoy suspended VAT.
36. Refunds of VAT incurred on assets and overheads used to produce taxable or zero-rated goods and services are allowed.
37. Agricultural inputs such as fertilisers, seeds, seedlings, feeds, and live animals are VAT-exempt.
38. Purchases, leases, or hire of agricultural equipment are VAT-exempt.
39. Disability aids including hearing aids, wheelchairs, and braille materials are exempt.
40. Shared passenger road transport services (non-charter) are VAT-exempt.
41. Electric vehicles and related parts are VAT-exempt.
42. Humanitarian relief supplies are VAT-exempt.
43. Baby products attract 0 per cent VAT.
44. Sanitary towels, pads, and tampons are VAT-exempt.
45. Land and building transactions are VAT-exempt.
Stamp Duties reliefs cover:
46. Electronic money transfers below ₦10,000.
47. Salary payments.48. Intra-bank transfers.
49. Transfers of government securities or shares.
50. All documents relating to the transfer of stocks and shares.
The Presidential Fiscal Policy and Tax Reforms Committee stated that the measures are part of the administration’s broader effort to make Nigeria’s tax system more progressive and business friendly.
It said the exemptions will cushion the effects of inflation, reduce the cost of living, and encourage private investment.
Oyedele explained that taxpayers should liaise with the Federal Inland Revenue Service and relevant state tax authorities for proper application of the reliefs.
He stressed that the success of the reforms will depend on transparency and cooperation between taxpayers and administrators.
The committee noted that the reform is expected to boost voluntary compliance, stimulate productivity in agriculture and manufacturing, and ensure equity in taxation.
It emphasised that while revenue collection remains critical, the government’s priority is to balance fiscal stability with social welfare and economic growth.
Observers said the implementation of these reliefs would be monitored closely to assess their impact on government revenue, small business expansion, and household spending.
The committee maintained that clear definitions and monitoring systems would be established to prevent abuse of exemptions and ensure only eligible individuals and enterprises benefit.
The reforms are a major pillar of the Federal Government’s fiscal modernisation strategy.
They align with the ongoing transition of the Federal Inland Revenue Service into the Nigeria Revenue Service, under the framework of a simplified, digitised tax administration model.
The committee further launched a civic awareness campaign tagged “Influencing For Good” to promote public understanding of the new tax reforms.
Citizens are encouraged to nominate influencers or content creators who educate their audiences on accurate tax information.
The top twenty nominees will receive specialised training to promote reliable, fact-based communication about the reforms.
The nomination process remains open until 9 November 2025 through a digital form provided by the committee.
According to the committee, the reforms mark a decisive step towards fairness and economic inclusion, ensuring that the nation’s tax laws protect the vulnerable while strengthening the economy’s productive base.
