Full List: 50 Tax Exemptions and Reliefs Nigerians Will Enjoy Under New Tax Laws
- Nigeria's new tax laws offer significant relief for low-income earners and small businesses starting January 1, 2026
- Key exemptions include PAYE for minimum wage earners and zero-rated VAT on essential goods and services
- The reforms aim to promote economic growth, fairness, and inclusivity across various sectors of the Nigerian economy
Nigeria’s new tax laws officially took effect on January 1, 2026, ushering in one of the most sweeping rounds of tax reliefs in recent years.
The reforms are designed to ease the burden on low-income earners, support middle-class taxpayers, and stimulate the growth of small businesses across key sectors of the economy.
Source: Twitter
From PAYE exemptions and pension reliefs to zero-rated VAT on essential goods, the new framework prioritises welfare, productivity, and enterprise expansion.
Below is a breakdown of the major exemptions and reliefs introduced under the new tax regime.
Personal Income Tax and PAYE reliefs
Low-income earners are among the biggest beneficiaries. Individuals earning the national minimum wage or less are fully exempt from PAYE.
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Tax Reforms: Nigerian workers report higher take-home pay in January 2026 under PAYE system
Annual gross income of up to N1.2 million is also exempt, translating to about N800,000 in taxable income after reliefs.
For middle-income earners, PAYE rates have been reduced for individuals earning up to N20 million annually. Gifts received by individuals are also exempt from personal income tax.
Allowable deductions for individuals
Several statutory deductions remain tax-free. These include pension contributions to licensed Pension Fund Administrators, National Health Insurance Scheme contributions, and National Housing Fund payments.
Other allowable deductions include interest on loans used to acquire owner-occupied residential housing, life insurance or annuity premiums, and rent relief equal to 20 per cent of annual rent, capped at N500,000.
Pension, gratuity and retirement benefits
All pension funds and assets managed under the Pension Reform Act are tax-exempt.
Pensions, gratuities, and retirement benefits paid in line with the Act are also exempt from tax.
In addition, compensation for loss of employment of up to N50 million is not taxable, offering relief to workers affected by retrenchment or restructuring.
Capital gains tax exemptions
Capital gains exemptions cover the sale of owner-occupied residential houses, personal effects worth up to N5 million, and the sale of up to two private vehicles per year.
Gains on shares below N150 million annually, or gains of up to N10 million, are exempt. Higher gains remain exempt if the proceeds are reinvested. Pension funds, charities, and religious institutions engaged in non-commercial activities are also excluded from CGT.
Companies' Income Tax and business incentives
Small companies with a turnover not exceeding N100 million and total fixed assets below N250 million pay zero per cent Companies Income Tax. Eligible labelled startups are fully exempt.
Businesses also enjoy compensation reliefs, including a 50 per cent additional deduction for salary increases, wage awards, or transport subsidies for low-income workers.
Employers hiring and retaining new staff for at least three years can deduct 50 per cent of related salaries. Agricultural businesses receive a five-year tax holiday.
VAT, Withholding Tax and other exemptions
Basic food items, education, healthcare, pharmaceutical products, rent, and shared passenger transport attract zero or no VAT.
According to a Punch report, small companies are exempt from charging VAT, while VAT on fuel, solar equipment, electric vehicles, and agricultural inputs is suspended or exempt.
Source: Twitter
Stamp duties no longer apply to electronic transfers below N10,000, salary payments, intra-bank transfers, and transactions involving government securities or shares.
Overall, the new tax laws represent a decisive shift toward fairness, economic inclusion, and business growth in Nigeria.
Tax reforms: Nigerian workers report higher take-home pay
Legit.ng earlier reported that the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has revealed that Nigerian workers are already seeing improvements in their take-home pay following the rollout of the new tax laws.
Oyedele shared this update in a post on X on Monday, January 26, 2026, referencing feedback from employees who received their January salaries.
According to him, many workers confirmed that deductions under the Pay-As-You-Earn (PAYE) system have dropped, leading to higher net earnings.
Source: Legit.ng
