Presidential Fiscal Committee unveils wide-ranging reforms cutting taxes for workers, startups, and key sectors including agriculture, health, and education…
From January 1, 2026, millions of Nigerians from low-income earners to small business owners will benefit from sweeping tax reliefs and exemptions introduced under the country’s new tax laws.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, announced the development on Monday via his official X (formerly Twitter) handle, highlighting that the reforms are designed to make Nigeria’s tax system fairer, simpler, and more growth-driven.
According to Oyedele, individuals earning the national minimum wage or less, as well as those with annual gross income of up to ₦1.2 million (equivalent to around ₦800,000 taxable income), will now enjoy full tax exemptions. Additionally, employees earning up to ₦20 million annually will benefit from reduced Pay-As-You-Earn (PAYE) taxes.
He added that gifts will no longer be subject to taxation under the new regime.
Allowable Deductions and Individual Reliefs
The new policy expands the list of deductible items for individual taxpayers, which now include:
- Pension contributions to a Pension Fund Administrator (PFA)
- National Health Insurance Scheme (NHIS) contributions
- National Housing Fund (NHF) contributions
- Interest on loans for owner-occupied residential housing
- Life insurance or annuity premiums
- A 20% rent relief on annual rent payments, capped at ₦500,000
Pensions, Gratuities, and Employment Compensation
Under the new law:
- Pension funds and assets managed under the Pension Reform Act (PRA) are tax-exempt.
- Pensions, gratuities, and other retirement benefits granted in line with the PRA will remain untaxed.
- Compensation for loss of employment up to ₦50 million will also be tax-free.
Capital Gains Tax (CGT) Exemptions
The reforms provide broad relief under Capital Gains Tax, exempting:
- The sale of owner-occupied houses
- Personal effects and chattels valued at ₦5 million or below
- The sale of up to two private vehicles per year
- Gains on shares below ₦150 million annually, or up to ₦10 million
- Gains reinvested in other shares, even above the exemption threshold
- Pension funds, religious institutions, and charitable organizations engaged in non-commercial activities
Companies Income Tax (CIT) Incentives
For businesses, especially smaller enterprises, the new structure offers substantial relief:
- Small companies with annual turnover not exceeding ₦100 million and fixed assets below ₦250 million will pay 0% tax.
- Labeled startups will enjoy full exemption.
- Firms that increase employee wages, provide transport subsidies, or offer wage awards to low-income workers will receive a 50% additional deduction.
- Businesses hiring and retaining new employees for at least three years will qualify for 50% employment relief.
- Agricultural enterprises including crop production, livestock, and dairy operations are granted a five-year tax holiday.
- Investors in labeled startups, venture capitalists, and incubators will enjoy exemptions on gains from such investments.
Development Levy and Withholding Tax
The committee also confirmed that small companies are exempt from the 4% development levy. In addition, manufacturers, small enterprises, and agricultural firms will no longer face withholding tax deductions on their income or payments to suppliers.
Value Added Tax (VAT) Reforms
The VAT framework will also see major adjustments.
Zero-rated (0%) VAT or exemptions will now apply to:
- Basic food items
- Rent
- Education materials and services
- Health and medical care
- Pharmaceutical products
- Diesel, petrol, and solar power equipment (VAT suspended or exempted)
Small companies earning ₦100 million or less annually are exempt from charging VAT altogether.
Oyedele further revealed that producers of VATable or zero-rated goods and services can now receive refunds of VAT paid on inputs and overhead costs, including:
- Fertilizers, seeds, seedlings, animal feeds, and live animals
- Purchase or hire of agricultural equipment
- Disability aids such as hearing aids, wheelchairs, and braille materials
- Shared passenger road transport services (excluding chartered vehicles)
Other items fully exempt from VAT include electric vehicles and parts, baby products, sanitary towels and pads, humanitarian supplies, and land and building transactions.
Stamp Duties Overhaul
The tax reforms also simplify financial transactions by removing stamp duties on:
- Electronic money transfers below ₦10,000
- Salary payments
- Intra-bank transfers
- Transfers of government securities and shares
- Documents relating to the transfer of stocks and shares
A Fairer, Simpler System
Oyedele emphasized that the new tax framework seeks to reduce the burden on average Nigerians, encourage job creation, and stimulate growth in key sectors like agriculture, manufacturing, and technology.
“These reforms mark a new phase in building a fair, efficient, and transparent tax system that rewards productivity and protects the most vulnerable,” he said.
The full implementation of these policies begins January 1, 2026.
