Tax reforms committee unveils 50 exemptions for low-income earners, SMEs from 2026

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The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has unveiled a comprehensive package of 50 new tax exemptions and reliefs designed to ease the financial burden on low-income earners, average taxpayers, and small businesses under Nigeria’s new tax reform framework, which takes effect January 1, 2026.

In a statement posted on his official X (formerly Twitter) handle, Oyedele described the initiative as “one of the most people-focused tax reforms in Nigeria’s recent history,” saying the measures promote fairness, simplicity, and inclusiveness within the country’s fiscal system.

“From 1 January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses,” Oyedele stated.
“Our aim is to reduce the tax burden on the poor and productive sectors of the economy while promoting compliance and improving the ease of doing business.”

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Highlights of the 50 Tax Reliefs and Exemptions

1. Personal Income Tax (PAYE)

• Workers earning the national minimum wage or below will be fully exempt.

• Annual income up to ₦1.2 million (about ₦800,000 taxable) will attract zero tax.

• Reduced PAYE rates for those earning up to ₦20 million per year.

• Gifts and donations to qualified causes will enjoy tax exemption.

2. Individual Deductions and Reliefs

• Pension, NHIS, and NHF contributions remain deductible.

• Deductions allowed for housing loan interest, life insurance/annuity premiums, and rent relief up to ₦500,000 or 20 % of annual rent.

3. Pensions and Gratuities

• All retirement benefits under the Pension Reform Act remain tax-free.

• Severance or loss-of-employment compensation up to ₦50 million will not be taxed.

4. Capital Gains Tax

• Owner-occupied homes, personal effects worth up to ₦5 million, and two private vehicle sales per year are exempt.

• Share gains below ₦150 million annually or ₦10 million per transaction will be exempt, and reinvested proceeds qualify for further relief.

5. Companies Income Tax (CIT)

• Small firms with turnover below ₦100 million and total assets under ₦250 million will pay 0 % CIT.

• Start-ups recognised as eligible under government guidelines are exempt.

• 50 % compensation relief for firms that raise salaries or offer transport subsidies to low-income workers.

• Agriculture businesses (crop, livestock, dairy) will enjoy a five-year tax holiday.

6. Development Levy

• Small companies are exempt from the 4 % levy.

7. Withholding Tax

• Exemption for small businesses, manufacturers, and agricultural operators from WHT deductions on income and supplier payments.

8. Value Added Tax (VAT)

• Basic food items, rent, education materials, healthcare services, and pharmaceuticals remain VAT-free.

• Businesses earning under ₦100 million annually will not charge VAT.

• Exemptions also cover agricultural inputs, disability aids, baby products, sanitary towels, electric vehicles and parts, and humanitarian supplies.

9. Stamp Duties

• Exemption for electronic transfers below ₦10,000, salary payments, intra-bank transfers, and transactions involving government securities or shares.

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Promoting Responsible Tax Communication

Beyond the fiscal reliefs, Oyedele launched an initiative to promote accurate public education about the reforms. He invited Nigerians to nominate social-media creators who have contributed to public understanding of tax laws for a special “Influencing for Good” training programme.

“Misinformation spreads fast, often to the author’s benefit but to the audience’s loss.
Accurate information may travel slower, but it empowers everyone and builds trust,” he said.

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Background

In June 2025, President Bola Ahmed Tinubu signed four key tax reform bills into law — the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill — forming the legal backbone of the 2026 tax overhaul.

Analysts say the new framework marks a major shift toward a progressive and citizen-centric tax system, balancing revenue generation with inclusive economic growth.