The Federal Government has released a comprehensive list of 50 tax exemptions and relief measures that will take effect from January 1, 2026, under the newly approved tax reform laws aimed at easing the financial burden on citizens and supporting small businesses.
The announcement was made by the Presidential Fiscal Policy and Tax Reforms Committee, which explained that the reforms are designed to promote fairness, equity, and productivity in Nigeria’s tax system, while ensuring that vulnerable groups and low-income earners are protected.
According to the Committee, the 50 exemptions and reliefs cover Personal Income Tax (PAYE), Allowable Deductions, Pensions and Gratuities, Capital Gains Tax, Companies Income Tax, Development Levy, Withholding Tax, Value Added Tax (VAT), and Stamp Duties.
Personal Income Tax (PAYE) – Exemptions and Reliefs
1. Individuals earning the national minimum wage or less – exempt.
2. Annual gross income up to ₦1.2 million (equivalent to ₦800,000 taxable income) – exempt.
3. Reduced PAYE tax for those earning annual gross income up to ₦20 million.
4. Gifts – exempt.
Allowable Deductions and Reliefs for Individuals
5. Pension contributions to Pension Fund Administrators (PFA).
6. National Health Insurance Scheme (NHIS) contributions.
7. National Housing Fund (NHF) 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).
Pensions and Gratuities – Exempt
11. Pension funds and assets under the Pension Reform Act (PRA).
12. Pension, gratuity, or retirement benefits granted under the PRA.
13. Compensation for loss of employment up to ₦50 million.
Capital Gains Tax (CGT) – Exempt
14. Sale of an owner-occupied residential 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 proceeds are reinvested.
19. Pension funds, charities, and religious institutions (non-commercial).
Companies Income Tax (CIT) – Exempt
20. Small companies (turnover not more than ₦100 million and fixed assets not more than ₦250 million) – 0% tax.
21. Eligible (labelled) startups – 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 retained for at least three years.
24. Tax holiday for first 5 years for agricultural businesses (crop, livestock, dairy, etc.).
25. Gains from investment in labelled startups by venture capitalists, private equity funds, accelerators, or incubators.
Development Levy – Exempt
26. Small companies are exempt from the 4% development levy.
Withholding Tax – Exempt
27. Small companies, manufacturers, and agricultural businesses are exempt from withholding tax deduction on their income.
28. Small companies are exempt from withholding tax on payments to suppliers.
Value Added Tax (VAT) – 0% or Exempt
29. Basic food items – 0% VAT.
30. Rent – exempt.
31. Education services and materials – 0% VAT.
32. Health and medical services – exempt.
33. Pharmaceutical products – 0% VAT.
34. Small companies (≤ ₦100 million turnover) – exempt from charging VAT.
35. Diesel, petrol, and solar power equipment – VAT suspended or exempt.
36. Refund of VAT on assets and overheads used to produce VATable or 0%-rated goods and services.
37. Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals.
38. Purchase, lease, or hire of agricultural equipment – exempt.
39. Disability aids – hearing aids, wheelchairs, braille materials.
40. Transport – shared passenger road transport (non-charter) – exempt.
41. Electric vehicles and their parts – exempt.
42. Humanitarian supplies – exempt.
43. Baby products – exempt.
44. Sanitary towels, pads, or tampons – exempt.
45. Land and building transactions – exempt.
Stamp Duties – Exempt
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.
