50 Tax Exemptions and Reliefs Nigerians Will Enjoy Under the New Tax Reform Laws

50 Tax Exemptions and Reliefs Nigerians Will Enjoy Under the New Tax Reform Laws

Nigeria’s new tax reform laws have introduced 50 major tax exemptions and reliefs aimed at reducing the financial burden on ordinary citizens, small businesses, and vulnerable households. The reforms focus on easing the cost of living, supporting low-income earners, and improving the operating environment for micro and small enterprises. These measures are part of the government’s broader agenda to promote inclusive economic growth and ensure that the tax system is fairer and more people-centred.

As part of sweeping tax reforms, the government has approved 50 exemptions and relief measures aimed at reducing the tax burden on low- and middle-income earners, retirees, small businesses, and critical sectors such as agriculture and manufacturing.

How To Get Your TIN Before January 2026 – Stay Tax-Compliant With Ease

Here is the full breakdown by category:

Personal Income Tax (PAYE) — Individuals & Employees

1. Individuals earning the national minimum wage or less are fully exempt from PAYE.
2. Annual gross income up to ₦1,200,000 (≈ ₦800,000 taxable income) is tax-free.
3. For those earning up to ₦20 million annually, reduced PAYE tax rates will apply (i.e. a more favorable progressive structure).
4. Gifts received by individuals are exempt from taxation.

Allowed Deductions & Reliefs for Individuals

These help reduce taxable income — a win for workers, renters, homeowners, and retirees:

5. Pension contributions made to a Pension Fund Administrator (PFA) remain deductible.
6. Contributions to the National Health Insurance Scheme (NHIS) are deductible.
7. Contributions to the National Housing Fund (NHF) qualify for deduction.
8. Interest paid on loans for owner-occupied residential housing is deductible.
9. Premiums for life insurance or annuity are deductible reliefs.
10. Rent relief: tenants can claim 20% of annual rent, capped at ₦500,000 per year.

Pensions, Gratuities & Retirement-Related Exemptions

11. Pension funds and assets under the Pension Reform Act (PRA) remain tax-exempt.
12. Pension, gratuity, or any retirement benefits granted under the PRA are exempt from tax.
13. Compensation for loss of employment, up to ₦50 million, will not be taxed.

Capital Gains Tax (CGT) Exemptions

To encourage home ownership, asset sales, and investment:

14. Sale of a owner-occupied house is exempt from CGT.
15. Sale of personal effects or chattels worth up to ₦5 million is exempt.
16. Sale of up to two private vehicles per year is exempt.
17. Gains from share sales below ₦150 million per year or individual transaction gains up to ₦10 million are exempt.
18. Even gains above the exemption threshold remain exempt if the proceeds are reinvested.
19. Investments by pension funds, charities, and approved religious (non-commercial) institutions remain exempt from CGT.

Companies Income Tax (CIT) & Business-Related Exemptions / Reliefs

Aimed at boosting small businesses, startups, agriculture, and job creation:

20. Small companies with turnover ≤ ₦100 million and fixed assets ≤ ₦250 million pay 0% CIT.
21. Eligible “labelled” startups also receive full CIT exemption under the reform.
22. For low-income worker salaries, companies providing salary increases, wage awards, or transport subsidies get a 50% additional deduction (compensation relief).
23. Companies that hire new employees and retain them for at least three years get a 50% employment deduction relief.
24. Agricultural businesses (crop production, livestock, dairy, etc.) enjoy a five-year tax holiday under the reforms.
25. Gains on investments made by venture capitalists, private equity funds, or incubators into qualified startups receive tax exemptions/reliefs.

Development Levy & Withholding Tax (WHT) Reliefs

26. Small companies are exempt from the 4% development levy.
27. Small companies, manufacturers, and agricultural firms are exempt from withholding tax on their income.
28. Small companies are also exempt from WHT deductions on payments to suppliers.

Value Added Tax (VAT) Exemptions & Zero-Rated Items

To ease living costs, especially for essentials:

29. Basic food items will attract 0% VAT (VAT-free).
30. Rent payments are exempt from VAT.
31. Educational services and materials carry 0% VAT.
32. Health and medical services are exempt from VAT.
33. Pharmaceutical products are VAT-free.
34. Small companies (turnover ≤ ₦100 million) are exempt from charging VAT.
35. Diesel, petrol, and solar power equipment will have VAT suspended or fully exempted.
36. Refunds on VAT paid for assets and overheads used to produce VATable or 0% VAT goods/services.
37. Agricultural inputs — fertilizers, seeds, seedlings, feeds, and live animals — are VAT-exempt.
38. Purchase, lease, or hire of equipment for agricultural purposes is VAT-exempt.
39. Disability aids — such as hearing aids, wheelchairs, and braille materials — are exempt from VAT.
40. Shared passenger road transport (non-charter) is VAT-exempt.
41. Electric vehicles and their parts are exempt from VAT.
42. Humanitarian supplies are exempt from VAT.
43. Baby products are exempt from VAT.
44. Sanitary items — such as sanitary towels, pads, or tampons — are VAT-exempt.
45. Transactions involving land and buildings are VAT-exempt.

Stamp Duty & Other Tax/Transaction Exemptions

46. Electronic money transfers below ₦10,000 are exempt from stamp duty.
47. Salary payments are exempt from stamp duty under the reform laws.
48. Intra-bank transfers are exempt from stamp duty.
49. Transfers of government securities or shares are exempt.
50. All documents related to the transfer of stocks and shares are exempt from stamp duties.

What This Means for Individuals, SMEs, and the Economy

• The reforms significantly reduce the tax burden for low-income earners, pensioners, and retirees.
• The tax exemptions on essentials (food, health, education, housing) can lower living costs and increase disposable income.
• SMEs, startups, and agricultural firms benefit from CIT holidays, VAT and levy exemptions — potentially boosting entrepreneurship, job creation, and investment in critical sectors.
• Reliefs on capital gains, asset sales, and reinvestments encourage home ownership, capital formation, and long-term investments.
• By exempting small businesses from multiple levies and taxes, the reforms aim to improve the ease of doing business, encourage compliance, and support growth in the informal and small-business economy.

About Author