From 1st January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses, according to Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele.
In an update on his X handle on Monday, Oyedele noted that small businesses, including individuals earning the national minimum wage or less, and those earning annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) will benefit from the tax relief.
There will also be reduced PAYE tax for those earning annual gross income up to ₦20 million.
Gifts will also be exempted from being taxed.
Oyedele further listed other items to benefit from the tax relief as:
Allowable Deduction & Reliefs For Individuals
1. Pension contribution to PFA
2. National Health Insurance Scheme
3. National Housing Fund contributions
4. Interest on loans for owner-occupied residential housing
5. Life insurance or annuity premiums
6. Rent relief – 20% of annual rent (up to ₦500,000)
Pensions & Gratuities – Exempt
7. Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
8. Pension, gratuity or any retirement benefits granted in line with the PRA
9. Compensation for loss of employment up to ₦50 million
Capital Gains Tax (CGT) – Exempt
11. Sale of an owner-occupied house
12. Personal effects or chattels worth up to ₦5 million
13. Sale of up to two private vehicles per year
14. Gains on shares below ₦150 million per year or gains up to ₦10 million
15. Gains on shares above exemption threshold if the proceeds are reinvested
16. Pension funds, charities, and religious institutions (non-commercial)
Companies Income Tax (CIT) – Exempt
17. Small companies (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax
18. Eligible (labelled) startups are exempt
19. Compensation relief – 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers
20. Employment relief – 50% deduction for salaries of new employees hired and retained for at least three years
21. Tax holiday for the first 5 years for agricultural businesses (crop production, livestock, dairy, etc)
22. Gains from investment in a labeled startup by venture capitalists, private equity funds, accelerators, or incubators
Development Levy – Exempt
23. Small companies are exempt from 4% development levy
Withholding Tax – Exempt
24. Small companies, manufacturers, and agricultural businesses are exempt from withholding tax deduction on their income
25. Small companies are exempt from deduction on their payments to suppliers
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Value Added Tax (VAT) – 0% or Exempt
26. Basic food items – 0% VAT
27. Rent – Exempt
28. Education services and materials – 0% VAT
29. Health and medical services
30. Pharmaceutical products – 0% VAT
31. Small companies (≤ ₦100m turnover) are exempt from charging VAT
32. Diesel, petrol, and solar power equipment – VAT suspended or exempt
Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services
33. Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals
34. Purchase, lease, or hire of equipment for agricultural purposes
35. Disability aids – hearing aids, wheelchairs, braille materials
36. Transport – shared passenger road transport (non-charter)
Electric vehicles and parts – exempt
37. Humanitarian supplies – exempt
38. Baby products
39. Sanitary towels, pads, or tampons
40. Land and building
Stamp Duties – Exempt
41. Electronic money transfers below ₦10,000
42. Salary payments
43. Intra-bank transfers
44. Transfers of government securities or shares
45. All documents for the transfer of stocks and shares
