The Nigerian government has unveiled 50 tax exemptions and relief measures aimed at providing significant financial relief to low-income earners, salaried workers, small businesses, and vulnerable sectors.
The new tax reform laws, described as one of the most progressive in recent history, introduce widespread exemptions across personal income tax (PAYE), capital gains, company income tax (CIT), value-added tax (VAT), and stamp duties.
Key Highlights of the 2026 Tax Reforms:
Personal Income Tax (PAYE) – Major Relief for Workers
1. Minimum wage earners fully exempt from PAYE.
2. Annual gross income up to ₦1.2 million (≈₦800,000 taxable) tax-free.
3. Reduced PAYE rates for incomes up to ₦20 million annually.
4. Gifts – completely exempt from tax.
Deductions & Reliefs for Individuals
– Pension contributions to PFA
– National Health Insurance Scheme (NHIS)
– National Housing Fund (NHF)
– Home loan interest (owner-occupied)
– Life insurance & annuity premiums
– Rent relief: 20% of annual rent (up to ₦500,000)
Pensions & Gratuities – Fully Exempt
– All pension funds under the Pension Reform Act (PRA)
– Gratuity, retirement benefits
– Compensation for job loss up to ₦50 million
Capital Gains Tax (CGT) – Exemptions
– Sale of primary residence
– Personal effects up to ₦5 million
– Sale of up to 2 private vehicles per year
– Share gains below ₦150 million/year or ₦10 million total
– Reinvested gains above threshold
– Transfers to pension funds, charities, religious bodies
Companies Income Tax (CIT) – Boost for SMEs & Startups
– Small companies (turnover ≤₦100M, assets ≤₦250M) pay 0% CIT
– Labeled startups – full exemption
– 50% extra deduction on salary increases, transport subsidies for low-income staff
– 50% relief on salaries of new hires retained for 3+ years
– 5-year tax holiday for agricultural businesses
– Gains from investments in labeled startups by VC/PE funds
Development Levy – Exempt
– Small companies exempt from 4% levy
Withholding Tax – Exempt
– Small companies, manufacturers, agric businesses exempt on:
– Income deductions
– Supplier payments
Value Added Tax (VAT) – 0% on Essentials
– Basic food items – 0% VAT
– Rent – fully exempt
– Education services & materials – 0%
– Healthcare & pharmaceuticals – 0%
– Small firms (≤₦100M turnover) – VAT-exempt
– Diesel, petrol, solar equipment – VAT suspended/exempt
– Agricultural inputs (fertilizer, seeds, feeds, live animals)
– Disability aids (hearing aids, wheelchairs, braille)
– Baby products, sanitary items
– Land & buildings
Stamp Duties – Exempt
– Electronic transfers below ₦10,000
– Salary payments
– Intra-bank transfers
– Government securities & shares
– Stock transfer documents
A New Era of Tax Fairness
The reforms signal a deliberate shift toward tax equity, shielding the poor and middle class while incentivizing small business growth, agriculture, manufacturing, and startup investment.
“This is tax justice in action. For the first time, millions of Nigerians earning minimum wage or modest incomes will pay little to no tax,”_ a senior finance ministry official said.
The reforms also protect critical social services—health, education, housing, and food—ensuring zero tax burden on life’s essentials.