Fifty (50) Tax Exemptions And Reliefs To Benefit Nigerians Under The New Tax Reform Laws From January 2026

A New Dawn for Nigerian Taxpayers

From 1 January 2026, the Federal Government’s new Tax Reform Laws will introduce an unprecedented wave of tax exemptions and reliefs designed to ease the financial burden on low-income earners, average taxpayers, and small businesses.

The reform marks a shift towards a fairer and more inclusive tax system encouraging compliance while protecting the most vulnerable Nigerians.

Below is a breakdown of key relief measures and exemptions across different tax categories.

PERSONAL INCOME TAX (PAYE)

• Individuals earning the national minimum wage or less will be fully exempt.
• Annual gross income up to ₦1.2 million (≈ ₦800,000 taxable income) — exempt.
• Reduced PAYE rates for individuals earning up to ₦20 million annually.
• Gifts received by individuals exempt from tax.

Allowable Deductions and Reliefs

Taxpayers can continue to enjoy deductions for:

• Pension contributions (PFA)
• National Health Insurance Scheme (NHIS)
• National Housing Fund (NHF) contributions
• Interest on owner-occupied housing loans
• Life insurance or annuity premiums
• Rent relief: 20% of annual rent (up to ₦500,000)

Pensions and Gratuities

• Pension funds and assets under the Pension Reform Act (PRA) remain tax-exempt.
• Pension, gratuity, or other retirement benefits granted in line with PRA exempt.
• Compensation for loss of employment up to ₦50 million exempt.

CAPITAL GAINS TAX (CGT)

To encourage asset ownership and investment, the following are exempt from CGT:

• Sale of an owner-occupied residential property
• Personal effects or chattels worth up to ₦5 million
• Sale of up to two private vehicles per year
• Gains on shares below ₦150 million annually or gains up to ₦10 million
• Reinvested gains above the exemption threshold
• Pension funds, charitable and religious institutions (non-commercial activities)

COMPANIES INCOME TAX (CIT)

Businesses are set to gain major reliefs:

• Small companies (turnover ≤ ₦100 million; fixed assets ≤ ₦250 million) — 0% tax rate
• Eligible startups formally labeled under the reform — CIT-exempt
• Compensation relief: 50% additional deduction for wage increases, bonuses, or transport subsidies granted to low-income staff
• Employment relief: 50% deduction on salaries of new employees retained for at least three years
• Agriculture sector: Five-year tax holiday for crop, livestock, and dairy production
• Startup investment relief: Gains from investments made by venture capitalists, private equity funds, accelerators, or incubators, exempt

DEVELOPMENT LEVY

• Small companies will no longer pay the 4% development levy.

WITHHOLDING TAX (WHT)

• Small businesses, manufacturers, and agric enterprises are exempt from WHT on their income.
• Payments to suppliers by small companies are also exempt from deduction.

VALUE ADDED TAX (VAT)

In a bid to support essential consumption and productive sectors:

• Basic food items — 0% VAT
• Rent — exempt
• Education and medical services/materials — 0% VAT
• Pharmaceutical products — 0% VAT
• Small companies (≤ ₦100 million turnover) — exempt from charging VAT
• Diesel, petrol, and solar energy equipment — VAT suspended/exempt
• Refundable VAT on assets and inputs used to produce VAT-exempt or 0% goods/services
• Agricultural inputs — fertilizers, seeds, seedlings, feeds, and live animals — exempt
• Purchase, lease, or hire of agricultural machinery — exempt
• Disability aids (wheelchairs, hearing aids, braille materials) — exempt
• Shared passenger transport (non-charter) — exempt
• Electric vehicles and parts — exempt
• Humanitarian supplies, baby products, and sanitary materials — exempt
• Land and building transactions — exempt

STAMP DUTIES

The following transactions will no longer attract stamp duty:

• Electronic money transfers below ₦10,000
• Salary payments
• Intra-bank transfers
• Transfer of government securities and shares
• All documents for transfer of stocks and shares