The federal government has disclosed that from January 1, 2026, Nigerians earning modest incomes, small businesses, and everyday taxpayers will begin to enjoy a wide range of exemptions and reliefs under the new tax reform laws signed by President Bola Tinubu’s administration.

It noted that the reforms aimed to simplify compliance and reduce the tax burden on lower-income groups.

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, posted on X to outline 50 key exemptions and deductions covering personal income, pensions, small businesses, and essential goods and services.

Overview of FG's 50 new tax exemptions

Here is a snapshot of the exemptions.

Personal Income Tax (PAYE)

According to the FG, Nigerians earning the national minimum wage or less would be exempt from paying tax

It also said that anyone with an annual gross income of up to N1.2 million, translating to about N800,000 taxable income, would also be exempt

Workers earning up to N20 million annually would be eligible for a reduced PAYE rate

As before, gifts would remain tax-free.

Allowable deductions and reliefs for individuals

The government said that pension contributions made to Pension Fund Administrators (PFAs) would be tax-deductible

Also, contributions to the National Health Insurance Scheme would also qualify for tax relief

Payments made to the National Housing Fund would be eligible for deductions

The interest paid on loans for owner-occupied residential housing would be considered for tax relief

The statement further mentioned that life insurance or annuity premiums would be deductible

Individuals could also enjoy a relief of 20% of their annual rent, capped at N500,000

Pensions and gratuities are exempt

Under the new reforms, all pension funds and assets regulated under the Pension Reform Act (PRA) will remain exempt from taxation

The FG also stated that pensions, gratuities, and other retirement benefits granted in accordance with the PRA will not be taxed

Compensation received for loss of employment, up to a limit of N50 million, will be exempt from tax.

Capital Gains Tax (CGT) exemptions

Profits from the sale of a personal home will no longer be taxed, according to the new policy

Items such as jewellery, artwork, and other personal effects valued at N5 million or less are to be excluded from capital gains tax

Individuals can now sell up to two private cars annually without facing any tax charges on the proceeds

The reform provides that gains from share sales below N150 million a year, or up to N10 million, will be free from tax

Investors who reinvest profits from share transactions that exceed the threshold will also enjoy exemption from capital gains tax

In addition, pension funds, registered charities, and religious organisations operating without commercial intent will remain outside the capital gains tax bracket.

Companies Income Tax (CIT) exemptions

Small businesses with revenue of N100 million or less and fixed assets not exceeding N250 million will pay no company income tax

Startups officially recognised under the 'labelled' category will also enjoy full tax exemption

Employers who raise wages, offer bonuses, or provide transport subsidies to low-income workers can claim an extra 50% deduction as compensation relief

Companies hiring new workers and retaining them for at least three years will qualify for a 50% employment relief on their salary expenses

Agricultural businesses, including crop farming, livestock, and dairy operations, will benefit from a five-year tax holiday

Investors such as venture capitalists, private equity firms, and startup incubators will not pay tax on gains from investments in accredited startups.

Development Levy exemptions

Small companies are exempt from the 4% development levy.

Withholding Tax exemptions

The government announced that small companies, manufacturers, and agricultural enterprises will no longer have withholding tax deducted from their income

It also stated that small companies are exempt from withholding tax on payments made to their suppliers.

Value Added Tax (VAT) - 0% or Exempt

The government confirmed that basic food items will attract 0% Value Added Tax (VAT)

Rent payments have been classified as VAT-exempt

Education-related services and materials will continue to enjoy a 0% VAT rate

Health and medical services are also exempt from VAT

Pharma products will be sold at a 0% VAT rate

Small companies with annual turnover not exceeding ₦100 million will not be required to charge VAT

VAT has been suspended or exempted on diesel, petrol, and solar power equipment

Businesses can now claim refunds on VAT paid for assets and overheads used in producing VATable or 0%-rated goods and services

Agricultural inputs such as fertilisers, seeds, seedlings, animal feeds, and live animals are exempt from VAT

The purchase, lease, or hire of agricultural equipment is also VAT-free

Disability aids, including hearing aids, wheelchairs, and braille materials, are exempt from VAT

Shared passenger road transport (excluding chartered services) will not attract VAT

Electric vehicles and their components are VAT-exempt

Humanitarian relief materials are excluded from VAT charges

Baby products are exempt from VAT

Sanitary products such as towels, pads, and tampons are VAT-free

Transactions involving land and buildings are exempt from VAT.

Stamp Duties - exempt

The government stated that electronic money transfers below N10,000 will not attract stamp duty

It clarified that salary payments are exempt from stamp duty charges

Intra-bank transfers between accounts held by the same person are also exempt

Transfers involving government securities or shares will not incur stamp duty

Additionally, all documents connected to the transfer of stocks and shares are exempt from stamp duty.