As part of the Federal Government’s 2024–2026 Fiscal Reform Agenda, Nigerians are set to enjoy a wide-ranging tax relief package aimed at reducing the cost of living, supporting small businesses, and encouraging economic growth.
The new measures will come into effect on January 1, 2026, under the recently enacted tax reform laws.
Individuals earning the national minimum wage or less will be fully exempt from taxes, while those with annual gross income up to ₦1,200,000 will also enjoy full exemption. Reduced Pay-As-You-Earn (PAYE) tax rates will apply to earners of up to ₦20 million annually. Gifts, pension contributions to a Pension Fund Administrator, NHIS contributions, and National Housing Fund payments are all exempt from taxation. Additional exemptions cover life insurance premiums, annuities, and rent relief of 20% of annual rent up to ₦500,000.
Capital gains tax exemptions include proceeds from the sale of an owner-occupied home, personal effects worth up to ₦5 million, and up to two private vehicles per year. Gains on shares under ₦150 million per year or gains up to ₦10 million are also exempt. Proceeds from higher gains can be exempted if reinvested. Pension funds, charities, and religious institutions engaging in non-commercial activities are also covered by capital gains exemptions.
Small companies with turnovers of ₦100 million or less and fixed assets below ₦250 million will pay zero percent Companies Income Tax. Eligible labelled startups will enjoy full exemption. Other incentives include a five-year tax holiday for agricultural businesses, deductions for salary increases and new employee hiring, and exemptions from development levy and withholding taxes for small companies, manufacturers, and agricultural businesses.
Value Added Tax (VAT) exemptions cover basic food items, rent, education and medical services, pharmaceuticals, agricultural inputs, diesel, petrol, solar equipment, electric vehicles and parts, humanitarian supplies, baby products, and sanitary products. Additionally, VAT refunds will apply on assets and overheads used in producing VATable or zero-rated goods and services.
Stamp duty exemptions apply to salary payments, intra-bank transfers, electronic money transfers below ₦10,000, and all documents related to the transfer of government securities, stocks, and shares. These measures reflect the government’s commitment to reducing the financial burden on citizens, boosting key economic sectors, and supporting the country’s recovery and growth. President Bola Ahmed Tinubu’s administration has described these reforms as part of a clear path to national prosperity.