Explainer: 50 tax exemptions, relief for Nigerians under new laws
Read also: New tax laws promise relief for Nigeria’s overburdened logistics industry
He said that with the implementation of the law from 1 January 2026: individuals earning the N70,000 national minimum wage or less will be exempted from personal income tax (PAYE).
2. Individuals whose annual gross income is N1,200,000 (translating to about N800,000 taxable income) is exempt.
3. There will be reduced PAYE tax for those earning annual gross income up to N20 million.
4. Gifts received will also not be taxed.
𝐀𝐥𝐥𝐨𝐰𝐚𝐛𝐥𝐞 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬 & 𝐑𝐞𝐥𝐢𝐞𝐟𝐬 𝐟𝐨𝐫 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥𝐬- for Nigerians with taxable income, they will be allowed to deduct the following before their tax is calculated:
5. Pension contribution to PFA.
6. National Health Insurance Scheme.
7. National Housing Fund contributions.
8. Interest on loans for owner-occupied residential housing.
9. Life insurance or annuity premiums.
10. Rent relief – 20 percent of annual rent (up to ₦500,000).
𝐏𝐞𝐧𝐬𝐢𝐨𝐧𝐬 & 𝐆𝐫𝐚𝐭𝐮𝐢𝐭𝐢𝐞𝐬 – 𝐄𝐱𝐞𝐦𝐩𝐭
11. Pension funds and assets under the Pension Reform Act (PRA) are tax-exempt.
12. Pension, gratuity or any retirement benefits granted in line with the PRA will not be taxed.
13. Compensation for loss of employment up to N50 million will not be taxed.
𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐆𝐚𝐢𝐧𝐬 𝐓𝐚𝐱 (𝐂𝐆𝐓) – 𝐄𝐱𝐞𝐦𝐩𝐭
14. Sale of an owner-occupied house .
15. Personal effects or chattels worth up to N5 million.
16. Sale of up to two private vehicles per year.
17. Gains on shares below N150 million per year or gains up to ₦10 million.
18. Gains on shares above exemption threshold if the proceed is reinvested.
19. Pension funds, charities, and religious institutions (non-commercial)
𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐈𝐧𝐜𝐨𝐦𝐞 𝐓𝐚𝐱 (𝐂𝐈𝐓) – 𝐄𝐱𝐞𝐦𝐩𝐭
20. Small companies, with turnover not more than N100 million and total fixed assets not more than N250 million pay 0% tax.
21. Eligible (labelled) startups are exempted from paying tax.
22. Compensation relief – 50 percent additional deduction for salary increases, wage awards, or transport subsidies for low-income workers.
23. Employment relief – 50 percent deduction for salaries of new employees hired and retained for at least three years.
24. Tax holiday for the first 5-years for agricultural businesses (crop production, livestock, dairy etc).
25. Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators will not be taxed.
𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 𝐋𝐞𝐯𝐲 – 𝐄𝐱𝐞𝐦𝐩𝐭
26. Small companies are exempt from 4 percent development levy.
𝐖𝐢𝐭𝐡𝐡𝐨𝐥𝐝𝐢𝐧𝐠 𝐓𝐚𝐱 – 𝐄𝐱𝐞𝐦𝐩𝐭
27. Small companies, manufacturers and agric businesses are exempt from withholding tax deduction on their income.
28. Small companies are exempt from deduction on their payments to suppliers.
𝐕𝐚𝐥𝐮𝐞 𝐀𝐝𝐝𝐞𝐝 𝐓𝐚𝐱 (𝐕𝐀𝐓) – 0% 𝐨𝐫 𝐄𝐱𝐞𝐦𝐩𝐭
29. Basic food items are VAT free.
30. Rent is VAT free.
31. Education services and materials are VAT free.
32. Health and medical services are VAT free.
33. Pharmaceutical products are VAT free.
34. Small companies (≤ ₦100m turnover) are exempt from charging VAT.
35. Diesel, petrol, and solar power equipment – VAT suspended or exempt.
36. Refund of VAT on assets and overheads to produce VATable or 0% VAT goods and services.
37. Agricultural inputs – fertilizers, seeds, seedlings, feeds, and live animals are VAT free.
38. Purchase, lease or hire of equipment for agric purposes- VAT free.
39. Disability aids – hearing aids, wheelchairs, braille materials-VAT free.
40. Transport – shared passenger road transport (non-charter)-VAT free.
41. Electric vehicles and parts – exempt.
42. Humanitarian supplies – exempt.
43. Baby products are VAT free.
44. Sanitary towels, pads or tampons are VAT free.
45. Land and building are VAT free.
𝐒𝐭𝐚𝐦𝐩 𝐃𝐮𝐭𝐢𝐞𝐬 – 𝐄𝐱𝐞𝐦𝐩𝐭
46. Electronic money transfers below N10,000 are exempt from stamp duty.
47. Salary payments – exempt from stamp duty.
48. Intra-bank transfers – exempt from stamp duty.
49. Transfers of government securities or shares – exempt from stamp duty.
50. All documents for transfer of stocks and shares – exempt from stamp duty.