The Federal Government has released a full list of fifty tax exemptions and reliefs that will take effect from the first of January 2026, aimed at reducing financial pressure on Nigerians and easing the tax burden on small businesses across the country. The announcement was made by the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms in a post on X, where he explained that the reforms are structured to support low-income earners, average taxpayers, and MSMEs that continue to struggle under rising living costs.
The new measures follow the signing of four major tax reform bills into law, covering tax administration, revenue service operations, and joint revenue coordination. The government believes that simplifying the system and reducing multiple taxation will improve business confidence, enlarge the tax base and support economic stability. Below is the full list of exemptions and reliefs released by the Federal Government.
Personal Income Tax or PAYE
Individuals earning the national minimum wage or less (exempt)
Annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) is exempt
Reduced PAYE tax for those earning an annual gross income of up to ₦20 million
Gifts (exempt)
Allowable Deductions and Reliefs for Individuals
5. Pension contribution to PFA
6. National Health Insurance Scheme
7. National Housing Fund contributions
8. Interest on loans for owner-occupied residential housing
9. Life insurance or annuity premiums
10. Rent relief – 20% of annual rent (up to ₦500,000)
Pensions and Gratuities – Exempt
11. Pension funds and assets under the Pension Reform Act are tax-exempt
12. Pension, gratuity or any retirement benefits granted under the PRA
13. Compensation for loss of employment up to ₦50 million
Capital Gains Tax – Exempt
14. Sale of an owner-occupied house
15. Personal effects or chattels worth up to ₦5 million
16. Sale of up to two private vehicles per year
17. Gains on shares below ₦150 million per year or gains up to ₦10 million
18. Gains on shares above the exemption threshold if the proceeds are reinvested
19. Pension funds, charities and religious institutions (non-commercial)
Companies Income Tax – Exempt
20. Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax
21. Eligible labelled startups are exempt
22. Compensation relief – 50% additional deduction for salary increases, wage awards or transport subsidies for low-income workers
23. Employment relief – 50% deduction for salaries of new employees hired and retained for at least three years
24. Tax holiday for the first five years for agricultural businesses
25. Gains from investment in a labelled startup by venture capitalists, private equity funds, accelerators or incubators
Development Levy – Exempt
26. Small companies are exempt from 4% development levy
Withholding Tax – Exempt
27. Small companies, manufacturers and agricultural businesses are exempt from withholding tax deduction on their income
28. Small companies are exempt from deduction on their payments to suppliers
Value Added Tax – 0% or Exempt
29. Basic food items – 0% VAT
30. Rent – Exempt
31. Education services and materials – 0% VAT
32. Health and medical services
33. Pharmaceutical products – 0% VAT
34. Small companies (≤ ₦100m turnover) are exempt from charging VAT
35. Diesel, petrol and solar power equipment – VAT suspended or exempt
36. Refund of VAT on assets and overheads used to produce VATable or 0% goods and services
37. Agricultural inputs – fertilizers, seeds, seedlings, feeds and live animals
38. Purchase, lease or hire of equipment for agricultural purposes
39. Disability aids – hearing aids, wheelchairs, braille materials
40. Transport – shared passenger road transport (non-charter)
41. Electric vehicles and parts – exempt
42. Humanitarian supplies – exempt
43. Baby products
44. Sanitary towels, pads or tampons
45. Land and building
Stamp Duties – Exempt
46. Electronic money transfers below ₦10,000
47. Salary payments
48. Intra-bank transfers
49. Transfers of government securities or shares
50. All documents for transfer of stocks and shares
