New Tax Reform Law Offers 50 Reliefs, Exemptions For Nigerians, Effective January 2026

IN what has been described as a landmark move to ease the financial burden on Nigerians, the Presidential Fiscal Policy and Tax Reforms Committee has unveiled a comprehensive package of 50 tax exemptions and reliefs that will take effect from 1 January 2026.

The new tax laws aim to benefit low-income earners, small businesses, and average taxpayers, marking a significant shift toward a more inclusive and equitable tax system.

According to the Committee, the reforms provide targeted relief across major tax categories, including Personal Income Tax, Companies Income Tax, Value Added Tax (VAT), Capital Gains Tax, Stamp Duties, and Development Levies.

Personal Income Tax (PAYE) Reliefs

Under the new structure, individuals earning the national minimum wage or less will be completely exempt from tax. Similarly, anyone earning an annual gross income up to ₦1.2 million (equivalent to ₦800,000 taxable income) will not be taxed.

Those earning up to ₦20 million annually will enjoy reduced PAYE tax, while gifts are now tax-exempt.

Allowable Deductions and Individual Reliefs

To further cushion living costs, deductions are now allowed for contributions to the Pension Fund Administrators (PFA), National Health Insurance Scheme, and National Housing Fund.

Other deductible expenses include interest on loans for owner-occupied residential houses, life insurance premiums, and rent relief of up to 20% of annual rent, capped at ₦500,000.

Pensions and Gratuities: Fully Exempt

The Committee confirmed that pension funds and assets under the Pension Reform Act (PRA) will remain tax-exempt. Additionally, pension, gratuity, or retirement benefits granted under the PRA, and compensation for loss of employment up to ₦50 million, are exempt from taxation.

Capital Gains Tax (CGT) Exemptions

The reforms extend significant relief to property and investment owners. Sales of owner-occupied houses, personal effects worth up to ₦5 million, and up to two private vehicles per year will be exempt from CGT.

Investors will also benefit, as gains on shares below ₦150 million per year, or up to ₦10 million, are exempt. Gains above the threshold will remain exempt if reinvested. Furthermore, pension funds, charities, and religious institutions not engaged in commercial activities will continue to enjoy CGT exemptions.

Companies Income Tax (CIT) Reliefs

Small companies with a turnover not exceeding ₦100 million and fixed assets not exceeding ₦250 million will pay 0% company income tax.

Eligible startups will enjoy tax holidays, while companies that increase wages, offer transport subsidies, or employ new staff for at least three years will qualify for 50% additional deductions.

Agricultural businesses, including crop production, livestock, and dairy farms, will benefit from a five-year tax holiday, while investors in labelled startups through venture capital or private equity funds will also enjoy exemption on investment gains.

Development Levy and Withholding Tax

Small companies are exempt from the 4% development levy. In addition, they will no longer face withholding tax deductions on their income or payments made to suppliers — a move expected to boost cash flow for micro and small enterprises.

Value Added Tax (VAT) Exemptions

The new VAT framework delivers sweeping relief for households and small businesses. Basic food items, education, health services, and pharmaceuticals will attract 0% VAT, while rent remains exempt.

Small businesses with annual turnover below ₦100 million will not be required to charge VAT. Other exempt or zero-rated items include diesel, petrol, solar equipment, fertilisers, seeds, and live animals, as well as disability aids such as wheelchairs and hearing devices.

Also included are baby products, sanitary towels, transport services, electric vehicles and their parts, and humanitarian supplies.

Stamp Duties Exemptions

To simplify financial transactions, electronic money transfers below ₦10,000, salary payments, intra-bank transfers, and transfers of government securities or shares will all be exempt from stamp duties. Likewise, documents relating to stock or share transfers will attract no duty.

Empowering Accurate Information

As part of efforts to ensure citizens fully understand the new system, the Committee launched an initiative tagged “Influencing for Good.”

The campaign invites the public to nominate content creators who have been educating their audiences about the tax reforms or who have the potential to do so effectively.

According to the Committee, the top 20 nominated creators will be selected for special training to help them share accurate, balanced, and useful tax information.

“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,” the statement read.

Nominations can be submitted via forms.gle/15kyv1ffx7tzTL… before the 9th of November 2025.

A New Dawn for Tax Fairness

The Committee said the reforms represent a “people-first approach” to taxation, balancing government revenue needs with the welfare of citizens.

With 50 relief measures covering daily essentials, job creation, housing, and business growth, the 2026 tax reform is expected to lighten the burden on ordinary Nigerians and encourage economic participation across all levels of society.