Nigeria’s fiscal landscape is set for a major transformation as the Presidential Fiscal Policy and Tax Reforms Committee, led by Mr. Taiwo Oyedele, unveils a sweeping set of 50 tax exemptions and reliefs designed to ease the financial burden on low-income earners, average taxpayers, and small and medium-sized enterprises (SMEs). The new framework will take effect from January 1, 2026, marking a historic shift toward a more inclusive and equitable tax system.
Announcing the initiative on his official X (formerly Twitter) account, Oyedele described the policy as “one of the most people-focused tax reforms in Nigeria’s recent history.” He emphasized that the reforms are centered on fairness, simplicity, and inclusiveness, targeting those who contribute most to economic productivity yet often bear a disproportionate share of tax hardship.
According to Oyedele, the committee’s proposals were crafted to reduce tax pressure on the poor, incentivize compliance among small businesses, and create a friendlier environment for entrepreneurship and job creation. The ultimate goal, he explained, is to modernize Nigeria’s fiscal framework while ensuring that taxation supports — rather than hinders — growth.
“From January 1, 2026, Nigeria’s new tax laws will provide substantial reliefs and exemptions for low-income earners, average taxpayers, and small businesses,” Oyedele stated.
Key Highlights of the 50 Tax Reliefs and Exemptions
1. Personal Income Tax (PAYE)
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Individuals earning at or below the national minimum wage will be fully exempt from personal income tax.
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Workers with annual gross income of up to ₦1.2 million (approximately ₦800,000 taxable income) will also be tax-free.
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Graduated PAYE reductions will apply to those earning up to ₦20 million per year.
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Charitable gifts and donations will now qualify for tax exemptions.
2. Deductions and Reliefs for Individuals
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Pension contributions, National Housing Fund, and Health Insurance payments remain fully deductible.
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Interest on home loans, life insurance premiums, and rent relief (up to ₦500,000 or 20% of annual rent) are allowed as additional deductions.
3. Pensions and Gratuities
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All retirement benefits, pensions, and gratuities under the Pension Reform Act remain tax-exempt.
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Severance or redundancy payments up to ₦50 million are exempt from taxation.
4. Capital Gains Tax
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Owner-occupied homes, personal effects worth up to ₦5 million, and up to two private vehicle sales per year are exempt from capital gains tax.
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Share sale gains below ₦150 million annually or ₦10 million per transaction will not be taxed.
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Investors who reinvest proceeds from asset sales into productive ventures will also qualify for relief.
5. Companies Income Tax (CIT)
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Small businesses earning less than ₦100 million annually and holding assets under ₦250 million will pay 0% CIT.
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Startups recognized under the government’s innovation policy will enjoy multi-year tax exemptions.
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Firms providing salary increases or transport subsidies to low-income staff will receive a 50% compensation relief.
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Agriculture-based enterprises will benefit from a five-year tax holiday covering crop production, dairy, and livestock operations.
6. Development Levy and Withholding Tax
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SMEs are exempt from the 4% development levy.
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Withholding tax exemptions apply to small companies, manufacturers, and farmers for income earned and payments made to suppliers.
7. Value Added Tax (VAT)
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Basic food items, educational materials, pharmaceuticals, healthcare services, and rent are now VAT-exempt.
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Businesses with annual turnover below ₦100 million will no longer charge VAT.
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Additional exemptions cover agricultural inputs, baby products, sanitary towels, electric vehicles, and humanitarian supplies.
8. Stamp Duties
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Electronic transfers under ₦10,000, salary payments, intra-bank transfers, and transactions involving shares or government securities will be free from stamp duties.
Promoting Transparency and Public Awareness
Oyedele also announced the launch of an “Influencing for Good” initiative — a public education campaign to promote accurate information about Nigeria’s evolving tax landscape. Citizens are encouraged to nominate social media creators who responsibly educate the public on tax matters for special recognition and training.
“Misinformation spreads quickly, often for profit, but accurate information builds trust,” Oyedele said. “Our goal is to help Nigerians understand their rights and responsibilities under the new tax system.”
Broader Policy Context
The tax relief package comes after President Bola Tinubu signed four landmark fiscal reform bills earlier in 2025 — the Nigeria Tax Bill, Tax Administration Bill, Revenue Service (Establishment) Bill, and the Joint Revenue Board Bill. These laws collectively aim to harmonize Nigeria’s fragmented tax structure, reduce overlapping levies, and enhance digital tax collection efficiency.
Analysts say the exemptions mark a significant step toward a progressive tax regime, where the wealthy and corporate giants bear a fairer share of the tax burden, while low-income Nigerians and productive sectors receive the support they need to thrive.
With implementation set for January 2026, the reforms are expected to strengthen Nigeria’s revenue base, enhance transparency, and promote a fairer, growth-driven fiscal system that reflects the administration’s commitment to inclusive economic recovery.
