Tax Reforms: FG Reveals 50 Reliefs, Benefits for Nigerians

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has unveiled 50 tax exemptions and reliefs designed to ease the financial burden on low-income earners, average taxpayers, and small businesses under Nigeria’s new tax reform laws, which will take effect from January 1, 2026.

Oyedele on WhatsApp platform released a comprehensive package, which he said represents one of the most people-focused tax reforms in Nigeria’s recent history, targeting fairness, simplicity, and inclusiveness in the country’s fiscal system.

He said the reform framework is part of the government’s commitment to “ensure that the masses and small businesses can thrive under a more just and growth-friendly tax environment.”

Under the new laws, individuals earning the national minimum wage or less will be exempt from Personal Income Tax (PIT) while those earning up to N1.2 million annually will also enjoy full exemption.

In addition, workers with an annual gross income up to N20 million will benefit from a reduced Pay As You Earn (PAYE) rate.

All gifts received by individuals are now tax-free, while several deductions will be allowable for personal tax computation.

These include contributions to pension funds, the National Health Insurance Scheme, and the National Housing Fund, as well as interest on loans for owner-occupied homes and life insurance or annuity premiums.

To protect retirees, all pension funds and assets under the Pension Reform Act remain tax-exempt. Likewise, pension and gratuity payments, as well as retirement benefits, are tax-free. Compensation for loss of employment up to N50 million will also be exempt.

The new law exempts the sale of an owner-occupied house and personal effects worth up to N5 million from Capital Gains Tax (CGT). Similarly, individuals can sell up to two private vehicles per year without tax liability.

Gains from shares below N150 million per year or up to N10 million will be exempt, while higher gains will also qualify for exemption if the proceeds are reinvested. Pension funds, charities, and non-commercial religious institutions will not be subject to CGT.

For businesses, the reform grants small companies — those with annual turnover not exceeding N100 million and total fixed assets below N250 million — a zero percent Companies Income Tax (CIT) rate. Eligible startups under Nigeria’s labeled startup framework will also enjoy tax exemption.

To encourage better worker welfare, companies offering salary increases, wage awards, or transport subsidies for low-income employees will receive a 50 percent additional deduction. Similarly, businesses hiring and retaining new staff for at least three years will get a 50 percent employment relief deduction.

Agricultural enterprises in crop production, livestock, and dairy farming will receive a five-year tax holiday, while investors in labeled startups — such as venture capitalists, accelerators, and private equity funds — will enjoy exemptions on qualifying investment gains.

Value Added Tax (VAT) exemptions and zero-rated items are among the most extensive in the new law.

Basic food items, educational services and materials, health and medical services, and pharmaceutical products will attract zero percent VAT. Rent, transport services, and humanitarian supplies are fully exempt.

Small companies with turnover not exceeding N100 million will not be required to charge VAT, while VAT on diesel, petrol, solar equipment, and agricultural inputs such as fertilizers, seeds, and feeds has been suspended or exempted.

Other exempt categories include baby products, sanitary towels, disability aids such as hearing aids and wheelchairs, and electric vehicles and their parts. Land and buildings also remain exempt from VAT.

Small companies, manufacturers, and agricultural businesses will no longer face withholding tax deductions on their income or payments to suppliers. In addition, small businesses will be exempt from the four percent development levy previously applicable.

To ease electronic transactions, transfers below N10,000 will not attract stamp duty. Salary payments, intra-bank transfers, and transfers of government securities, shares, or stocks are also exempt. All documents related to share transfers are covered under this relief.

Oyedele also announced a civic initiative tagged “Influencing for Good,” aimed at empowering content creators and influencers to educate the public on Nigeria’s new tax reforms.

“We are selecting 20 creators who have demonstrated commitment to public enlightenment for a special training session to help them share accurate and useful tax information,” he explained.

The 50 tax exemptions and reliefs mark a significant shift in Nigeria’s fiscal policy direction — one that prioritizes equity, productivity, and relief for households and businesses as the nation works toward a fairer and more efficient tax system.