AfriPulse
If you’ve been following the conversation around Nigeria’s new tax reform laws and worried about what they might mean for your income, there’s some good news. On Monday, the Presidential Fiscal Policy & Tax Reforms Committee released a list of 50 tax exemptions and reliefs that will take effect from January 1, 2026.
The reforms are structured to provide significant financial relief to low-income earners, average taxpayers, and the nation’s small business sector to keep more of their hard-earned money. The new framework introduces targeted relief across certain areas of the tax system, including Personal Income Tax (PAYE), Companies Income Tax (CIT), Value Added Tax (VAT), and Capital Gains Tax (CGT).
Here are 50 tax reliefs and exemptions that could favour you:
Value-added tax (VAT) on goods and services
Under the new tax reforms, VAT is now removed from a wide range of essentials, including basic food items, baby products, sanitary pads and tampons, pharmaceutical products, medical and hospital services, and education services and learning materials. Rent (residential accommodation), public/shared road transport, disability aids (like hearing aids, braille tools, and wheelchairs), and land and building transactions are also VAT-exempt.
To support affordability and production, agricultural inputs such as fertilisers, seeds, feeds, and live animals, and the purchase or lease of equipment for farming, are VAT-free. Diesel, petrol, and solar power equipment also have VAT suspended or removed, and producers can claim VAT refunds on equipment and overheads used to make products that are themselves VAT-exempt.
Electric vehicles and their parts, as well as humanitarian relief supplies, are also exempt, which lowers acquisition and logistics costs for transport and emergency response systems.
Small companies earning ₦100 million or less per year no longer need to charge VAT at all, which can prevent hidden price increases for consumers. This VAT exemption structure is designed to ensure that essential living does not become more expensive.
Personal Income Tax or PAYE relief for salary earners
Minimum wage earners are exempt from PAYE; if you earn ₦70,000 per month or less, there will be no PAYE deduction.
Annual gross income up to ₦1,200,000 is exempt; If your income at the end of the year is up to ₦1,200,000, it means you have about ₦800,000 of taxable income. As such, your income is tax-free.
Reduce PAYE for income up to ₦20 million; if this is your income bracket, your tax deduction is less.
Gifts are not taxed.
Allowable deductions
These are specific expenses you can subtract from your income before your tax is calculated, which reduces your taxable income. These expenses include:
Pension submitted to the Pension Fund Administrator.
National Health Insurance Scheme.
National Housing Fund contributions.
Interest on a mortgage for your own home is deducted.
Your premiums for life insurance or an annuity.
You can deduct 20% of your annual rent from your income, which can be up to ₦500,000.
Pensions and job loss payments
All pension funds and their assets, including gratuity or any retirement benefits under the Pension Reform Act (PRA), will not be taxed.
Compensation for losing your job is tax-free up to ₦50 million.
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Capital Gains Tax (CGT)
This tax is on the profit you make from selling an asset. The new laws exempt many of your most common personal assets from this tax.
The money gotten from selling the house you live in is not taxed.
Personal belongings worth up to ₦5 million are tax-free when sold.
You can sell up to two personal cars per year without paying CGT on the funds.
Gains on shares up to ₦150 million per year or ₦10 million for small investors are tax-exempt.
If you reinvest profits above the exemption threshold into Nigerian companies, CGT will not apply.
Pension funds, charities, and religious bodies don’t pay CGT on their non-commercial assets.
Companies Income Tax (CIT) relief for small businesses
The reforms aim to help small businesses thrive by cutting their income tax and rewarding them for creating jobs.
If a small company’s turnover is less than ₦100 million, and its assets are less than ₦250 million, it pays 0% company income tax.
Startups that have been officially labelled as eligible for the tax relief are exempt from paying company income tax.
Companies that increase salaries or provide wage support, including a wage award or transport subsidy, to low-income staff are liable to a 50% extra tax deduction.
Companies get a 50% tax deduction for salaries of new employees they hire and keep for at least 3 years.
Businesses in the agriculture sector get a 5-year tax holiday, meaning that taxes are suspended during that period.
Gains made by investors, venture capitalists, private equity funds, accelerators or incubators who put money into labelled startups are not taxed.
Small companies do not pay the 4% development levy on their profits, which consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT), the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy.
Small companies do not have withholding tax deducted from their income. Withholding tax is an advance tax payment.
Small companies do not have to deduct withholding tax when paying suppliers.
Stamp duties
This tax usually applies to legal documents and certain bank transfers. These transactions will not be charged under the new reforms:
Transfers below ₦10,000 are not charged stamp duty.
Salary payments are not charged stamp duty.
Sending money to a user from the same bank is not charged stamp duty.
Transfers of government bonds and securities are stamp-duty exempt.
Documents used to transfer stocks and shares are fully exempt.
The goal of these new tax reforms is to reduce pressure on low-income citizens and small businesses, all while encouraging investment and job creation. On paper, these changes offer meaningful relief for workers and SMEs. The real impact of these exemptions will depend on their implementation. Unless you’re a remote worker earning more than the minimum wage, from 2026, more of your income would stay with you and not the taxman.
Source: TechCabal | Read the Full Story…
