Full List: FG Releases 50 Items, Classes of People Who Will Not Pay Tax From January 2026
5 min read
- Nigeria has a new tax law, which is scheduled to take effect in January 2026, covering both salary and non-salary earners
- The new tax is seen as the biggest reform since independence, with the federal government clarifying the misconceptions
- Legit.ng has broken down the 50 tax exemptions that will provide a measure of relief for low-income earners in Nigeria
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The federal government has disclosed that from January 1, 2026, Nigerians earning modest incomes, small businesses, and everyday taxpayers will begin to enjoy a wide range of exemptions and reliefs under the new tax reform laws signed by President Bola Tinubu’s administration.
Source: Facebook
It noted that the reforms aimed to simplify compliance and reduce the tax burden on lower-income groups.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, posted on X to outline 50 key exemptions and deductions covering personal income, pensions, small businesses, and essential goods and services.
Overview of FG's 50 new tax exemptions
Here is a snapshot of the exemptions.
Personal Income Tax (PAYE)
- According to the FG, Nigerians earning the national minimum wage or less would be exempt from paying tax
- It also said that anyone with an annual gross income of up to N1.2 million, translating to about N800,000 taxable income, would also be exempt
- Workers earning up to N20 million annually would be eligible for a reduced PAYE rate
- As before, gifts would remain tax-free.
Allowable deductions and reliefs for individuals
- The government said that pension contributions made to Pension Fund Administrators (PFAs) would be tax-deductible
- Also, contributions to the National Health Insurance Scheme would also qualify for tax relief
- Payments made to the National Housing Fund would be eligible for deductions
- The interest paid on loans for owner-occupied residential housing would be considered for tax relief
- The statement further mentioned that life insurance or annuity premiums would be deductible
- Individuals could also enjoy a relief of 20% of their annual rent, capped at N500,000.
Pensions and gratuities are exempt
- Under the new reforms, all pension funds and assets regulated under the Pension Reform Act (PRA) will remain exempt from taxation
- The FG also stated that pensions, gratuities, and other retirement benefits granted in accordance with the PRA will not be taxed
- Compensation received for loss of employment, up to a limit of N50 million, will be exempt from tax.
Capital Gains Tax (CGT) exemptions
- Profits from the sale of a personal home will no longer be taxed, according to the new policy
- Items such as jewellery, artwork, and other personal effects valued at N5 million or less are to be excluded from capital gains tax
- Individuals can now sell up to two private cars annually without facing any tax charges on the proceeds
- The reform provides that gains from share sales below N150 million a year, or up to N10 million, will be free from tax
- Investors who reinvest profits from share transactions that exceed the threshold will also enjoy exemption from capital gains tax
- In addition, pension funds, registered charities, and religious organisations operating without commercial intent will remain outside the capital gains tax bracket.
Companies Income Tax (CIT) exemptions
- Small businesses with revenue of N100 million or less and fixed assets not exceeding N250 million will pay no company income tax
- Startups officially recognised under the 'labelled' category will also enjoy full tax exemption
- Employers who raise wages, offer bonuses, or provide transport subsidies to low-income workers can claim an extra 50% deduction as compensation relief
- Companies hiring new workers and retaining them for at least three years will qualify for a 50% employment relief on their salary expenses
- Agricultural businesses, including crop farming, livestock, and dairy operations, will benefit from a five-year tax holiday
- Investors such as venture capitalists, private equity firms, and startup incubators will not pay tax on gains from investments in accredited startups.
Development Levy exemptions
- Small companies are exempt from the 4% development levy.
Source: Twitter
Withholding Tax exemptions
- The government announced that small companies, manufacturers, and agricultural enterprises will no longer have withholding tax deducted from their income
- It also stated that small companies are exempt from withholding tax on payments made to their suppliers.
Value Added Tax (VAT) - 0% or Exempt
- The government confirmed that basic food items will attract 0% Value Added Tax (VAT)
- Rent payments have been classified as VAT-exempt
- Education-related services and materials will continue to enjoy a 0% VAT rate
- Health and medical services are also exempt from VAT
- Pharma products will be sold at a 0% VAT rate
- Small companies with annual turnover not exceeding ₦100 million will not be required to charge VAT
- VAT has been suspended or exempted on diesel, petrol, and solar power equipment
- Businesses can now claim refunds on VAT paid for assets and overheads used in producing VATable or 0%-rated goods and services
- Agricultural inputs such as fertilisers, seeds, seedlings, animal feeds, and live animals are exempt from VAT
- The purchase, lease, or hire of agricultural equipment is also VAT-free
- Disability aids, including hearing aids, wheelchairs, and braille materials, are exempt from VAT
- Shared passenger road transport (excluding chartered services) will not attract VAT
- Electric vehicles and their components are VAT-exempt
- Humanitarian relief materials are excluded from VAT charges
- Baby products are exempt from VAT
- Sanitary products such as towels, pads, and tampons are VAT-free
- Transactions involving land and buildings are exempt from VAT.
Stamp Duties - exempt
- The government stated that electronic money transfers below N10,000 will not attract stamp duty
- It clarified that salary payments are exempt from stamp duty charges
- Intra-bank transfers between accounts held by the same person are also exempt
- Transfers involving government securities or shares will not incur stamp duty
- Additionally, all documents connected to the transfer of stocks and shares are exempt from stamp duty
Tinubu approves 15% import duty on petrol
Earlier, Legit.ng reported that President Bola Tinubu had approved 15% import duty on Premium Motor Spirit (PMS), also known as petrol, and Automotive Gas Oil (AGO), commonly known as diesel, on October 21, 2025.
The approval was conveyed by Damilotun Aderemi, the presidential secretary, following a request by the Federal Inland Revenue Service, with the intention of giving local refiners, such as Dangote, a market advantage.
Proofreading by Bruce Douglas, copy editor at Legit.ng.
Source: Legit.ng
