As part of its ongoing fiscal policy reforms aimed at easing the burden on low-income earners and boosting business competitiveness, the Presidential Fiscal Policy and Tax Reforms Committee Chair, Taiwo Oyedele, has announced 50 new tax exemptions and reliefs scheduled to take effect from January 1, 2026.

The wide-ranging tax reliefs, contained in the Tax Reform Laws, form a major component of the government’s drive to promote inclusive economic growth, reduce inequality, and stimulate job creation across sectors.

According to details released by the Committee Chair on X, the new laws will restructure the current tax regime to favour low- and middle-income earners, micro, small, and medium-scale enterprises (MSMEs), startups, and key sectors such as agriculture, manufacturing, and technology.

Under the new provisions, individuals earning the national minimum wage or less will be fully exempted from paying Personal Income Tax (PAYE). Similarly, annual gross incomes of up to N1.2 million, translating to a taxable income of about N800,000, will attract no tax.

The reforms also introduced a progressive PAYE structure that reduces tax obligations for those earning up to N20 million yearly. Additionally, gifts and certain allowances will be exempted from taxation.

Other allowable deductions include contributions to the National Pension Scheme, National Health Insurance, National Housing Fund, and life insurance or annuity premiums. Rent relief of up to 20 per cent of yearly rent, capped at N500,000, will also apply.

To safeguard retirees and employees, pension funds, gratuities, and retirement benefits provided under the Pension Reform Act (PRA) will remain tax-exempt. Compensation for loss of employment up to N50 million will also not be taxed, offering significant relief for displaced workers.

In a move aimed at encouraging asset ownership and capital formation, gains from the sale of an owner-occupied residential home, personal effects valued at up to N5 million, or the sale of up to two private vehicles per year will be exempt from Capital Gains Tax (CGT).

Investors will also enjoy exemptions on gains from share transactions below N150 million annually or up to N10 million. Reinvested share proceeds will likewise qualify for tax exemptions, while pension funds, charities, and non-commercial religious institutions will continue to enjoy tax-free investment status.

The reforms introduced significant incentives for corporate entities, especially startups and small businesses. The documents informed that companies with a yearly turnover not exceeding N100 million and total fixed assets below N250 million will pay zero per cent Companies Income Tax (CIT).

Eligible startups will also benefit from full exemptions, while companies that increase staff salaries, grant wage awards, or offer transport subsidies to low-income employees will qualify for a 50 per cent additional tax deduction under compensation relief measures.

To further encourage job creation, businesses hiring and retaining new employees for at least three years will receive a 50 per cent employment deduction.

In addition, agricultural enterprises, covering crop production, livestock, and dairy, will enjoy a five-year tax holiday, while investors in certified startups will receive tax reliefs on qualifying venture capital, private equity, or accelerator funding.

The Value Added Tax (VAT) regime will also see a major overhaul. Basic food items, rent, educational materials, healthcare services, pharmaceutical products, and agricultural inputs will either attract 0 per cent VAT or be fully exempt.

Diesel, petrol, and solar power equipment will have VAT suspended, while small companies with annual turnover not exceeding N100 million will be exempt from charging VAT on their goods and services.

Other VAT-free categories include disability aids, baby and sanitary products, shared passenger transport, electric vehicles and parts, and humanitarian supplies.

The reform package further exempts small companies, manufacturers, and agricultural firms from withholding tax deductions on their income and payments to suppliers.

Under Stamp Duties, electronic money transfers below N10,000, salary payments, intra-bank transfers, and transfers of government securities or shares will all be exempt from duty charges.

Experts said the reforms represented one of the most ambitious attempts in recent years to simplify Nigeria’s complex tax system and make it more equitable. The initiative aligns with the government’s plan to reduce the tax burden on productive sectors while improving voluntary compliance and revenue efficiency.

By focusing on low- and middle-income earners, MSMEs, and strategic sectors, the new policy seeks to drive consumption, investment, and job creation, key elements in revitalising the economy amid global uncertainties.