What You Should Know About Nigeria’s 50 New Tax Exemptions

Starting January 1, 2026, Nigerians, particularly low-income earners, small businesses, and average taxpayers, will begin to enjoy a wide range of tax waivers and reliefs under the new tax reform laws introduced by the Federal Government.

The Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, released a breakdown of 50 specific tax exemptions and relief categories designed to ease the financial burden on individuals and businesses, while promoting growth and inclusion in the economy.

Personal Income Tax / PAYE — Who Won’t Pay Income Tax

Certain income levels and categories will now be fully exempt or enjoy significant reliefs:

1. Workers earning the national minimum wage or less — exempt
2. Individuals earning up to ₦1.2 million annually — exempt
3. Individuals earning up to ₦20 million yearly — eligible for relief
4. Gifts received are not taxable

Deductions That Reduce Tax (Before PAYE)

Taxpayers can now deduct key personal expenses before tax is calculated:

5. Pension contribution
6. NHIS contribution
7. National Housing Fund contributions
8. Interest on home ownership loans
9. Life insurance or annuity payments
10. Rent relief up to ₦500,000 or 20% of annual rent

Pension and Retirement Income — Fully Exempt

Retirement-related funds and benefits are protected:

11. Pension funds and assets
12. Pension, gratuity, and retirement benefits
13. Job loss compensation up to ₦50 million

Capital Gains Tax (CGT) — Reduced or Waived

Certain asset sales and gains will no longer attract CGT:

14. Sale of personal homes
15. Sale of personal items up to ₦5 million
16. Sale of up to two private cars yearly
17. Small share transactions under ₦150m / ₦10m — exempt
18. Reinvested share gains — tax-free
19. Pension funds, charities, and religious bodies (non-commercial) — exempt

Companies Income Tax — Boost for Small Businesses

To support job creation and innovation:

20. Small companies (≤ ₦100m turnover) — no CIT
21. Labelled startups — exempt
22. Employers that raise salaries for low-income workers get deductions
23. Employers that hire and retain staff for 3 years get additional relief
24. Agric-based companies — 5-year tax holiday
25. Venture capital investors in startups — exempt

Development Levy — Waived for Small Firms

26. Small businesses are not required to pay this levy

Withholding Tax (WHT) — Reduced for Small Enterprises

27. Small companies, manufacturers, and agric businesses — exempt
28. Payments to suppliers by small companies — exempt

Value Added Tax (VAT) — Zero on Essentials

Essential goods and services remain VAT-free or zero-rated:

29. Basic food items,
30. House rent,
31. Education,
32. Healthcare
33. Pharmaceuticals,
34. agricultural inputs, and equipment hire
35. Diesel, petrol, solar equipment
Disability aids, baby products, sanitary items
Public transport, electric vehicles, humanitarian relief items
Small companies (≤ ₦100m turnover) — not required to charge VAT
Buying/selling land and buildings — VAT-free
VAT refunds allowed for production capital purchases

Stamp Duty — Removed for Small Transactions

To encourage financial inclusion and ease digital transactions:

46. Electronic transfers below ₦10,000 — exempt
47. Salary payments and intra-bank transfers — exempt
48. Transfers within the same bank — exempt
49. Transfers of government securities and shares — exempt
50. Documents for share transfers — exempt

These 50 exemptions and relief measures form part of Nigeria’s 2024–2026 Fiscal Roadmap, set to take effect from January 2026, marking a major step toward a fairer and more inclusive tax system.