The Federal Government has announced 50 new tax exemptions and reliefs designed to cushion the impact of ongoing fiscal reforms on Nigerians, particularly low-income earners and small businesses.
The measures, part of the government’s sweeping tax reform agenda, will take effect from January 1, 2026, according to the Presidential Fiscal Policy and Tax Reforms Committee led by Taiwo Oyedele.
The News Chronicle gathered that the reforms are a core component of President Bola Tinubu’s strategy to promote inclusive economic growth, reduce inequality, and stimulate job creation across critical sectors such as agriculture, manufacturing, and technology.
Under the new tax framework, individuals earning the national minimum wage or less will be fully exempted from paying Personal Income Tax (PAYE). Likewise, annual incomes of up to N1.2 million, representing a taxable income of about N800,000, will attract no tax obligations. The PAYE system has also been restructured to be more progressive, easing the burden for workers earning up to N20 million yearly.
The reform introduces several personal and business deductions, including contributions to pension, health insurance, housing, and life insurance schemes. Rent relief of up to 20 percent of annual rent, capped at N500,000, has also been approved. Additionally, compensation for job losses up to N50 million, pensions, and gratuities under the Pension Reform Act remain tax-exempt.
In a move to boost asset ownership and capital formation, the government exempted gains from the sale of owner-occupied homes, personal effects worth up to N5 million, and up to two private vehicle sales per year from Capital Gains Tax (CGT). Small investors will also enjoy exemptions on share transactions below N150 million annually, while proceeds reinvested into new shares will qualify for tax reliefs.
Micro and small businesses will gain significantly from the reforms. Companies with an annual turnover below N100 million or assets under N250 million will pay zero Companies Income Tax (CIT). Startups and businesses that increase staff salaries or provide transport support to low-income employees will qualify for up to 50 percent compensation deductions. Firms that hire and retain workers for at least three years will also receive employment-related tax incentives.
Agricultural businesses—spanning crop production, livestock, and dairy—will enjoy a five-year tax holiday, while investors in certified startups will get reliefs on venture capital and equity investments.
The Value Added Tax (VAT) structure has also been revised to protect consumers. Essential goods and services such as food items, rent, educational materials, healthcare, and pharmaceuticals will attract zero or exempt VAT rates. Diesel, petrol, solar power systems, disability aids, and electric vehicle parts are also exempt.
In addition, small firms and agricultural producers will not face withholding tax deductions, while stamp duties will no longer apply to transactions below N10,000, including salaries and transfers of government securities.
Analysts say the reforms represent one of Nigeria’s boldest steps toward building a fair, efficient, and business-friendly tax system that prioritizes productivity, equity, and economic renewal amid global uncertainty.
