Nigeria’s new tax reform laws, set to take effect from January 1, 2026, will introduce 50 tax exemptions and relief aimed at easing the financial burden on low-income earners, average taxpayers, and small businesses a major step toward reshaping the nation’s fiscal landscape.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, unveiled the package on Thursday via a public WhatsApp update, describing it as “one of the most people-focused tax reforms in Nigeria’s recent history.”
He said the reforms emphasize fairness, simplicity, and inclusiveness, ensuring that “the masses and small businesses can thrive under a more just and growth-friendly tax environment.”
Under the new framework:
- Individuals earning the national minimum wage or less will be exempt from Personal Income Tax (PIT), while those earning up to ₦1.2 million annually will also enjoy full exemption.
- Workers earning up to ₦20 million yearly will benefit from reduced PAYE rates.
- Personal deductions such as pension contributions, National Health Insurance, National Housing Fund, mortgage interest, and life insurance premiums remain tax-free.
- Renters will receive a 20% rent relief (up to ₦500,000 annually).
- Pensions, gratuities, and retirement benefits stay fully exempt, alongside job-loss compensation up to ₦50 million.
- Sales of owner-occupied homes, personal effects (≤ ₦5 million), and up to two private vehicles yearly will not attract capital gains tax.
- Share gains below ₦150 million or reinvested proceeds will also be exempt.
For businesses, small companies with annual turnover below ₦100 million and total fixed assets under ₦250 million will pay no Companies Income Tax (CIT).
Startups recognized under Nigeria’s innovation framework will enjoy full tax exemption, while firms that increase wages or hire and retain new employees for at least three years will receive a 50% additional deduction.
The reform further grants a five-year tax holiday to agricultural ventures in crop production, livestock, and dairy farming. Investors in qualified startups including venture capitalists and private equity funds will also enjoy tax-free gains on approved investments.
On consumption, VAT exemptions and zero-rated items have been expanded to cover:
- Basic food items, educational materials, health and pharmaceutical products, and rent.
- Transport services, baby and sanitary products, disability aids, electric vehicles, and humanitarian supplies.
- Diesel, petrol, solar equipment, and agricultural inputs such as fertilizers, seeds, and feeds all with VAT suspended or exempted.
Small companies earning ≤ ₦100 million annually will not be required to charge VAT, and withholding tax will no longer apply to their income or supplier payments. The 4% development levy has also been scrapped for small firms.
To ease electronic transactions, transfers below ₦10,000, salary payments, and intra-bank or securities transfers are now exempt from stamp duty.
Oyedele also launched a civic education campaign tagged “Influencing for Good,” which will train 20 content creators to educate Nigerians on the new tax regime.
“We’re selecting creators committed to public enlightenment to help share accurate and useful tax information,” he said.
According to Oyedele, the new tax system marks a decisive shift toward equity and growth offering the most comprehensive relief package ever extended to Nigerian taxpayers.
