Beginning January 1, 2026, the new tax rules will provide numerous reliefs and exemptions for low-income individuals, typical taxpayers, and small enterprises, including:
Individuals earning the national minimum wage or less are excluded.
Annual gross income up to ₦1,200,000 (equivalent to around ₦800,000 taxable income) is exempt.
Reduced PAYE tax for those earning up to ₦20 million per year.
Gifts (exempt).
Allowable deductions and reliefs for persons
Pension contribution to PFA and National Health Insurance Scheme.
National Housing Fund donations
Interest on loans for owner-occupied residential properties
Life insurance and annuity premiums
Rent relief: 20% of annual rent (up to ₦500,000).
Pensions and Gratuities - Exempt
Pension funds and assets covered by the Pension Reform Act (PRA) are tax exempt.
Pension, gratuity, or any retirement benefits awarded in accordance with the PRA.
Compensation for job loss up to ₦50 million, with exemption from Capital Gains Tax (CGT).
Sale of an owner-occupied home
Personal property worth up to ₦5 million.
Sale of up to two private autos each year.
Gains on shares under ₦150 million annually or up to ₦10 million.
Gains on shares exceeding the exemption level if the proceeds are reinvested
Pension funds, charitable organizations, and non-profit religious institutions
Companies Income Tax (CIT): Exempt
Small firms with a turnover of less than ₦100 million and total fixed assets under ₦250 million.
Pension funds and assets covered by the Pension Reform Act (PRA) are tax exempt.
Pension, gratuity, or any retirement benefits awarded in accordance with the PRA.
Compensation for job loss up to ₦50 million, with exemption from Capital Gains Tax (CGT).
Sale of an owner-occupied home
Personal property worth up to ₦5 million.
Sale of up to two private autos each year.
Gains on shares under ₦150 million annually or up to ₦10 million.
Gains on shares exceeding the exemption level if the proceeds are reinvested
Pension funds, charitable organizations, and non-profit religious institutions
Companies Income Tax (CIT): Exempt
Small firms with a turnover of less than ₦100 million and total fixed assets under ₦250 million.
Pay 0% tax
Eligible (labeled) startups are excluded.
Compensation relief - A 50% additional deduction for pay raises, wage awards, or transportation subsidies for low-income workers.
Employment relief: 50% deduction for salary of new employees hired and retained for at least three years.
Tax exemption during the first five years for agricultural operations (crop production, livestock, dairy, etc.)
Profits from investment in a designated startup by venture capitalists, private equity funds, accelerators, or incubators
Development Levy - Exempt
Small firms are exempt from the 4% development levy.
Withholding Tax: Exempt
Small firms, manufactures, and agricultural businesses are excluded from the withholding tax deduction on their revenue.
Small businesses are excluded from deductions on their payments to suppliers.
Value-Added Tax (VAT): 0% or exempt
Eligible (labeled) startups are excluded.
Compensation relief - A 50% additional deduction for pay raises, wage awards, or transportation subsidies for low-income workers.
Employment relief: 50% deduction for salary of new employees hired and retained for at least three years.
Tax exemption during the first five years for agricultural operations (crop production, livestock, dairy, etc.)
Profits from investment in a designated startup by venture capitalists, private equity funds, accelerators, or incubators
Development Levy - Exempt
Small firms are exempt from the 4% development levy.
Withholding Tax: Exempt
Small firms, manufactures, and agricultural businesses are excluded from the withholding tax deduction on their revenue.
Small businesses are excluded from deductions 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 have 0% VAT.
Small enterprises with a revenue of ≤ ₦100 million are exempt from VAT.
Diesel, petrol, and solar power equipment: VAT suspended or exempt.
Refund of VAT on assets and overheads to generate VATable or 0% VAT Goods and Services
Fertilizers, seeds, seedlings, feed, and live animals are all examples of agricultural inputs.
Purchase, lease, or hire equipment for agricultural purposes
Disability aids: hearing aids, wheelchairs, and braille materials.
Transportation: shared passenger road transport (non-charter).
Electric vehicles and parts are excluded.
Exemption for humanitarian supplies.
Baby products
Sanitary towels, pads, and tampons
Land and buildings
Stamp Duties: Exempt
Rent: Exempt
Education services and materials: 0% VAT.
Health and medical services.
Pharmaceutical products have 0% VAT.
Small enterprises with a revenue of ≤ ₦100 million are exempt from VAT.
Diesel, petrol, and solar power equipment: VAT suspended or exempt.
Refund of VAT on assets and overheads to generate VATable or 0% VAT Goods and Services
Fertilizers, seeds, seedlings, feed, and live animals are all examples of agricultural inputs.
Purchase, lease, or hire equipment for agricultural purposes
Disability aids: hearing aids, wheelchairs, and braille materials.
Transportation: shared passenger road transport (non-charter).
Electric vehicles and parts are excluded.
Exemption for humanitarian supplies.
Baby products
Sanitary towels, pads, and tampons
Land and buildings
Stamp Duties: Exempt
Electronic money transfers under ₦10,000 Salary payments.
Intrabank transfers
Transfers of government securities and shares
All paperwork for transferring stocks and shares.
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Intrabank transfers
Transfers of government securities and shares
All paperwork for transferring stocks and shares.
Spread the excellent news to everyone you care about who needs to know.
INFLUENCING FOR GOOD
Nominate a content producer who has been teaching their audience on Nigeria's new tax reform laws, or someone you would want to see do the same.
We'll select the top 20 creators who receive the most nominations for special training to help them provide accurate, balanced, and valuable tax information with their audiences.
Misinformation spreads quickly, usually to the author's advantage but to the audience's detriment. Accurate knowledge travels slowly, but it empowers everyone and builds long-term trust.
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great news platform
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