From 1 January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses including:
Personal Income Tax or PAYE
Individuals earning the national minimum wage or less (exempt)
Annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) is exempt
Reduced PAYE tax for those earning annual gross income up to ₦20 million
Gifts (exempt)
Allowable Deductions & Reliefs for individuals
Pension contribution to PFA
National Health Insurance Scheme
National Housing Fund contributions
Interest on loans for owner-occupied residential housing
Life insurance or annuity premiums
Rent relief – 20% of annual rent (up to ₦500,000)
Pensions & Gratuities – Exempt
Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
Pension, gratuity or any retirement benefits granted in line with the PRA
Compensation for loss of employment up to ₦50 million
Capital Gains Tax (CGT) – Exempt
Sale of an owner-occupied house
Personal effects or chattels worth up to ₦5 million
Sale of up to two private vehicles per year
Gains on shares below ₦150 million per year or gains up to ₦10 million
Gains on shares above exemption threshold if the proceed is reinvested
Pension funds, charities, and religious institutions (non-commercial)
Companies Income Tax (CIT) – Exempt
Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax
Eligible (labelled) startups are exempt
Compensation relief – 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers
Employment relief – 50% deduction for salaries of new employees hired and retained for at least three years
Tax holiday for the first 5-years for agricultural businesses (crop production, livestock, dairy etc)
Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators
Development Levy – Exempt
Small companies are exempt from 4% development levy
Withholding Tax – Exempt
Small companies, manufacturers and agric businesses are exempt from withholding tax deduction on their income
Small companies are exempt from deduction on their payments to suppliers
Value Added Tax (VAT) – 0% or Exempt
Basic food items – 0% VAT
Rent – Exempt
Education services and materials – 0% VAT
Health and medical services
Pharmaceutical products – 0% VAT
Small companies (≤ ₦100m turnover) are exempt from charging VAT
Diesel, petrol, and solar power equipment – VAT suspended or exempt
Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services
Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals
Purchase, lease or hire of equipment for agric purposes
Disability aids – hearing aids, wheelchairs, braille materials
Transport – shared passenger road transport (non-charter)
Electric vehicles and parts – exempt
Humanitarian supplies – exempt
Baby products
Sanitary towels, pads or tampons
Land and building
Stamp Duties – Exempt
Electronic money transfers below ₦10,000
Salary payments
Intra-bank transfers
Transfers of government securities or shares
All documents for transfer of stocks and shares
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– Presidential Fiscal Policy & Tax Reforms Committee
FIFTY (50) TAX EXEMPTIONS AND RELIEFS THAT WILL BENEFIT THE MASSES UNDER THE NEW TAX REFORM LAWS EFFECTIVE FROM 1 JANUARY 2026
4 min read
From 1 January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses including: Personal Income Tax or PAYE Allowable Deductions & Reliefs for individuals Pensions & Gratuities – Exempt Capital Gains Tax (CGT) – Exempt Companies Income Tax (CIT) – Exempt Development Levy – Exempt […]