FG unveils 50 tax exemption reliefs to support low-income earners, SMEs

Stories by Seun Ibiyemi

The Federal Government (FG) has unveiled 50 new tax exemptions and relief measures aimed at reducing the financial burden on low-income earners, average taxpayers, and small businesses as part of the new tax reform laws taking effect from January 1, 2026.

The comprehensive package, announced by the Presidential Fiscal Policy and Tax Reforms Committee, is designed to make Nigeria’s tax system more equitable and growth-oriented while supporting households and enterprises struggling under rising living costs.

According to the committee, the reforms provide specific reliefs under the Personal Income Tax (PAYE), Capital Gains Tax, Company Income Tax, Value Added Tax (VAT), Withholding Tax, and Stamp Duties laws.

Under the new law, individuals earning the national minimum wage or less will be completely exempt from personal income tax. Also, those earning an annual gross income of up to ₦1.2 million roughly ₦800,000 in taxable income will pay no tax.

The reform further introduces reduced PAYE rates for workers earning up to ₦20 million annually, alongside tax-deductible contributions to pension funds, health insurance schemes, the National Housing Fund, and life insurance premiums.

Tenants will also enjoy 20 percent rent relief on annual rent, up to a maximum of ₦500,000.

For the business sector, the new framework offers strong incentives for micro, small, and medium enterprises (MSMEs). 

Companies with an annual turnover not exceeding ₦100 million and total fixed assets under ₦250 million will be exempt from Company Income Tax (CIT).

Other business incentives include a five-year tax holiday for agricultural ventures, a 50 percent deduction for companies that increase workers’ salaries or provide transport subsidies to low-income staff, and another 50 percent deduction for employers who hire and retain new employees for at least three years.

Startups officially recognized as “eligible” under the new system will also enjoy full tax exemptions, while investors in certified startups including venture capital and private equity funds l will benefit from tax-free gains.

The reform exempts from Capital Gains Tax (CGT) the sale of an owner-occupied house, two private vehicles per year, personal effects worth up to ₦5 million, and gains on shares below ₦150 million annually. Higher gains will also be exempted if reinvested in eligible ventures.

For Value Added Tax (VAT), the new policy retains a 0 per cent rate on basic food items, rent, education materials, health services, pharmaceuticals, diesel, petrol, and solar power equipment.

Small businesses with turnover below ₦100 million will not be required to charge VAT. Additionally, agricultural inputs, disability aids, baby products, electric vehicles, and transport services are included among the exempt categories.

The new tax law also removes stamp duty charges on salary payments, electronic transfers below ₦10,000, intra-bank transfers, and transfers of government securities or shares.

To encourage public awareness and counter misinformation about the reforms, the Committee launched a citizen engagement campaign tagged “Influencing for Good.” 

The initiative invites Nigerians to nominate content creators who educate their audiences about the country’s new tax laws for a special government-supported training session.

Nominations for the programme close on November 9, 2025, according to the Committee.

The new tax reform framework aligns with President Bola Tinubu’s economic policy objective of creating a “fair, efficient, and inclusive tax system” that supports job creation, business growth, and improved living standards for all Nigerians.