By
From January 1, 2026, Nigeriaโs new tax law will come to effect. This law will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses.
The following are the reliefs that will boost the welfare of these classes of people and promote the growth of small scale businesses.
๐๐๐ซ๐ฌ๐จ๐ง๐๐ฅ ๐๐ง๐๐จ๐ฆ๐ ๐๐๐ฑ ๐จ๐ซ ๐๐๐๐
Exempts individuals earning the national minimum wage or less
Annual gross income up to N1,200,000 (translating to about N800,000 taxable income) is exempt
Reduced PAYE tax for those earning annual gross income up to N20 million
Gifts (exempt)
๐๐ฅ๐ฅ๐จ๐ฐ๐๐๐ฅ๐ ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง๐ฌ & ๐๐๐ฅ๐ข๐๐๐ฌ ๐๐จ๐ซ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ๐ฌ
Pension contribution to PFA
National Health Insurance Scheme
National Housing Fund contributions
Interest on loans for owner-occupied residential housing
Life insurance or annuity premiums
Rent relief โ 20% of annual rent (up to N500,000)
๐๐๐ง๐ฌ๐ข๐จ๐ง๐ฌ & ๐๐ซ๐๐ญ๐ฎ๐ข๐ญ๐ข๐๐ฌ โ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
Pension, gratuity or any retirement benefits granted in line with the PRA
Compensation for loss of employment up to N50 million
๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐๐๐ข๐ง๐ฌ ๐๐๐ฑ (๐๐๐) โ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Personal effects or chattels worth up to N5 million
Sale of up to two private vehicles per year
Gains on shares below N150 million per year or gains up to N10 million
Gains on shares above exemption threshold if the proceed is reinvested
Pension funds, charities, and religious institutions (non-commercial)
๐๐จ๐ฆ๐ฉ๐๐ง๐ข๐๐ฌ ๐๐ง๐๐จ๐ฆ๐ ๐๐๐ฑ (๐๐๐) โ ๐๐ฑ๐๐ฆ๐ฉ
Small companies (turnover not more than N100 million and total fixed assets not more than N250 million) pay 0% tax
Eligible (labelled) startups are exempt
Compensation relief โ 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers
Employment relief โ 50% deduction for salaries of new employees hired and retained for at least three years
Tax holiday for the first 5-years for agricultural businesses (crop production, livestock, dairy etc)
Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators
๐๐๐ฏ๐๐ฅ๐จ๐ฉ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ฒ โ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Small companies are exempt from 4% Development Levy
๐๐ข๐ญ๐ก๐ก๐จ๐ฅ๐๐ข๐ง๐ ๐๐๐ฑ โ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Small companies, manufacturers and agric businesses are exempt from withholding tax deduction on their income
Small companies are exempt from deductions on their payments to suppliers
๐๐๐ฅ๐ฎ๐ ๐๐๐๐๐ ๐๐๐ฑ (๐๐๐) โ 0% ๐จ๐ซ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Basic food items โ 0% VAT
Rent โ Exempt
Education services and materials โ 0% VAT
Health and medical services
Pharmaceutical products โ 0% VAT
Small companies (N100m turnover) are exempt from charging VAT
Diesel, petrol, and solar power equipment โ VAT suspended or exempt
Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services
Agricultural inputs โ fertilizers, seeds, seedlings, feeds, and live animals
Purchase, lease or hire of equipment for agric purposes
Disability aids โ hearing aids, wheelchairs, braille materials
Transport โ shared passenger road transport (non-charter)
Electric vehicles and parts โ exempt
Humanitarian supplies โ exempt
Baby products
Sanitary towels, pads or tampons
Land and building
๐๐ญ๐๐ฆ๐ฉ ๐๐ฎ๐ญ๐ข๐๐ฌ โ ๐๐ฑ๐๐ฆ๐ฉ๐ญ
Electronic money transfers below N10,000
Salary payments
Intra-bank transfers
for transfer of Transfers of government securities or shares
All documents stocks and shares
In this article