The federal government has unveiled 50 tax exemptions and relief measures to reduce the burden on low-income earners, average taxpayers, and small businesses under the new tax reform laws taking effect from 1 January 2026.
The Chairperson of the Presidential Fiscal Policy and Tax Reforms Committee,Taiwo Oyedele, disclosed this in a post on X on Monday.
|
|
The measures are designed to make the tax system fairer, simpler, and more beneficial to ordinary Nigerians, he said.
On 26 June, President Bola Tinubu signed four tax reform laws, the Nigeria Tax Act (NTA), Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service (Establishment) Act (NRSEA) and Joint Revenue Board (Establishment) Act (JRBEA), to overhaul Nigeria’s fiscal system.
|
|
|
|---|
The new laws, consolidated into a single document for efficiency, aim to boost growth and strengthen tax administration.
Personal Tax Reliefs
Under the new law, individuals earning the national minimum wage or less will be exempt from personal income tax.
Those whose annual gross income does not exceed N1.2 million, translating to about N800,000 taxable income, will also be fully exempt.
Stay Ahead with Premium Times
Follow us on Google News and never miss breaking stories, investigations, and in-depth reporting.
Add as a preferred source on Google
There will be reduced PAYE rates for people earning up to N20 million annually, while gifts received by individuals will no longer be taxed.
Other allowable deductions include pension contributions, National Health Insurance Scheme (NHIS) payments, National Housing Fund contributions, life insurance or annuity premiums, and interest on loans for owner-occupied housing. Rent relief of 20 per cent of annual rent, up to N500,000, is also provided.
Retirement and compensation
All pension funds and assets regulated under the Pension Reform Act (PRA) will remain tax-exempt. Pensions, gratuities, and other retirement benefits granted in line with the PRA will not attract tax.
In addition, compensation for loss of employment up to N50 million will be exempted from tax.
The new law exempts from Capital Gains Tax (CGT) the sale of an owner-occupied house, personal effects or chattels worth up to N5 million, and the sale of up to two private vehicles per year.
Gains on shares below N150 million per year or up to N10 million will also be exempt. Investors who reinvest proceeds from share sales above the exemption threshold will continue to enjoy reliefs.
Pension funds, charities, and religious institutions engaged in non-commercial activities will also be exempt from CGT.
Corporate Incentives
Small companies with annual turnover not exceeding N100 million and total fixed assets below N250 million will continue to pay 0 per cent company income tax.
Eligible startups will also enjoy exemptions, while firms that increase salaries, grant wage awards, or provide transport subsidies to low-income workers will qualify for a 50 per cent additional deduction known as the compensation relief.
Businesses that hire and retain new employees for at least three years will also be entitled to a 50 per cent employment relief deduction.
Agricultural companies involved in crop production, livestock, or dairy farming will enjoy a five-year tax holiday, while investors in labelled startups through venture capital funds, accelerators or incubators will be exempt from tax on their investment gains.
Other Exemptions
Small companies will not pay the 4 per cent development levy and are also exempt from withholding tax deductions, both on their income and payments made to suppliers.
For Value Added Tax (VAT), several goods and services will either attract 0 per cent VAT or be fully exempt. These include basic food items, rent, education materials and services, health and medical services, pharmaceutical products, agricultural inputs, and diesel.
Small firms with N100 million or less in turnover will not be required to charge VAT. The exemption list also covers solar power equipment, baby products, sanitary towels, disability aids, and electric vehicles.
Shared road transport, non-chartered passenger services, and humanitarian supplies are also exempt, as are land and building transactions.
In addition, electronic money transfers below N10,000, salary payments, intra-bank transfers, and transfers of government securities or shares will not attract stamp duties.
Influence
To support better public understanding of the new policies, the committee has launched an outreach initiative to engage social media influencers, journalists, and business groups.
“Misinformation spreads fast, often to the author’s benefit but to the audience’s loss. Accurate information may travel slower, but it empowers everyone and earns lasting trust,” Mr Oyedele wrote.
He urged Nigerians to rely on official communication channels for verified updates on the reforms.
Full list below
1. Individuals earning the national minimum wage or less (exempt)
2. Annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) is exempt
3. Reduced PAYE tax for those earning annual gross income up to ₦20 million
4. Gifts (exempt)
&
5. Pension contribution to PFA
6. National Health Insurance Scheme
7. National Housing Fund contributions
8. Interest on loans for owner-occupied residential housing
9. Life insurance or annuity premiums
10. Rent relief – 20% of annual rent (up to ₦500,000)
& –
11. Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
12. Pension, gratuity or any retirement benefits granted in line with the PRA
13. Compensation for loss of employment up to ₦50 million
() –
14. Sale of an owner-occupied house
15. Personal effects or chattels worth up to ₦5 million
16. Sale of up to two private vehicles per year
17. Gains on shares below ₦150 million per year or gains up to ₦10 million
18. Gains on shares above exemption threshold if the proceed is reinvested
19. Pension funds, charities, and religious institutions (non-commercial)
() –
20. Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax
21. Eligible (labelled) startups are exempt
22. Compensation relief – 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers
23. Employment relief – 50% deduction for salaries of new employees hired and retained for at least three years
24. Tax holiday for the first 5-years for agricultural businesses (crop production, livestock, dairy etc)
25. Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators
–
26. Small companies are exempt from 4% development levy
–
27. Small companies, manufacturers and agric businesses are exempt from withholding tax deduction on their income
28. Small companies are exempt from deduction on their payments to suppliers
READ ALSO: $32.8 million Fine Dispute: Meta settles with Nigerian govt out of court
() – 0%
29. Basic food items – 0% VAT
30. Rent – Exempt
31. Education services and materials – 0% VAT
32. Health and medical services
33. Pharmaceutical products – 0% VAT
34. Small companies (≤ ₦100m turnover) are exempt from charging VAT
35. Diesel, petrol, and solar power equipment – VAT suspended or exempt
36. Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services
37. Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals
38. Purchase, lease or hire of equipment for agric purposes
39. Disability aids – hearing aids, wheelchairs, braille materials
40. Transport – shared passenger road transport (non-charter)
41. Electric vehicles and parts – exempt
42. Humanitarian supplies – exempt
43. Baby products
44. Sanitary towels, pads or tampons
45. Land and building
–
46. Electronic money transfers below ₦10,000
47. Salary payments
48. Intra-bank transfers
49. Transfers of government securities or shares
50. All documents for transfer of stocks and shares
Discover more from Premium Times Nigeria
Subscribe to get the latest posts sent to your email.
More News
![Fitch Ratings agency. [PHOTO CREDIT: Thisday Live]](https://i0.wp.com/media.premiumtimesng.com/wp-content/files/2020/04/Fitch-Ratings-agency.jpg?fit=800%2C450&ssl=1)
