Nigeria’s New Tax Reality: What You Need to Know

By Emmanuel Kwada 

From January 1, 2026, four new tax reform laws signed by President Bola Tinubu will introduce 50 exemptions, deductions, and reliefs aimed at easing the burden on low- and middle-income earners, small businesses, and vulnerable sectors.

The government presents these changes as a pro-poor overhaul of a fragmented system. Critics, however, argue they are modest tweaks that fail to offset the broader economic pain caused by subsidy removal, naira devaluation, and soaring inflation.

The reforms consolidate Nigeria’s tax statutes into the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Establishment Act, and Joint Revenue Board Establishment Act.

Proponents say they simplify compliance, broaden the tax net fairly, and protect the masses. Skeptics counter that the reliefs are selective, leaving structural hardships unaddressed.

𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞 𝐓𝐚𝐱 𝐨𝐫 𝐏𝐀𝐘𝐄

1. Individuals earning the national minimum wage or less (exempt)

2. Annual gross income up to ₦1,200,000 (translating to about ₦800,000 taxable income) is exempt

3. Reduced PAYE tax for those earning annual gross income up to ₦20 million

4. Gifts (exempt)

𝐀𝐥𝐥𝐨𝐰𝐚𝐛𝐥𝐞 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬 & 𝐑𝐞𝐥𝐢𝐞𝐟𝐬 𝐟𝐨𝐫 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥𝐬

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% 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

13. Compensation for loss of employment up to ₦50 million

𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐆𝐚𝐢𝐧𝐬 𝐓𝐚𝐱 (𝐂𝐆𝐓) – 𝐄𝐱𝐞𝐦𝐩t

14. Sale of an owner-occupied house

15. Personal effects or chattels worth up to ₦5 million

16. Sale of up to two private vehicles per year

17. Gains on shares below ₦150 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 (turnover not more than ₦100 million and total fixed assets not more than ₦250 million) pay 0% tax

21. Eligible (labelled) startups are exempt

22. Compensation relief – 50% additional deduction for salary increases, wage awards, or transport subsidies for low-income workers

23. Employment relief – 50% 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

𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭 𝐋𝐞𝐯𝐲 – 𝐄𝐱𝐞𝐦𝐩𝐭

26. Small companies are exempt from 4% 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 – 0% VAT

30. Rent – Exempt

31. Education services and materials – 0% VAT

32. Health and medical services

33. Pharmaceutical products – 0% VAT

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

38. Purchase, lease or hire of equipment for agric purposes

39. Disability aids – hearing aids, wheelchairs, braille materials

40. Transport – shared passenger road transport (non-charter)

41. Electric vehicles and parts – exempt

42. Humanitarian supplies – exempt

43. Baby products

44. Sanitary towels, pads or tampons

45. Land and building

𝐒𝐭𝐚𝐦𝐩 𝐃𝐮𝐭𝐢𝐞𝐬 – 𝐄𝐱𝐞𝐦𝐩𝐭

46. Electronic money transfers below ₦10,000

47. Salary payments

48. Intra-bank transfers

49. Transfers of government securities or shares

50. All documents for transfer of stocks and shares.

Supporters highlight that these measures could inject disposable income into households, stimulate small-scale entrepreneurship, and lower costs for essentials amid inflation above 30%.

The Presidential Fiscal Policy and Tax Reforms Committee emphasizes that high earners and large corporations will shoulder a greater share, potentially generating revenue for infrastructure without punishing the poor.

Yet critics point out limitations. The national minimum wage exemption offers scant relief when living costs have multiplied since its 2019 enactment.

Rent relief caps may fall short in high-cost cities like Lagos or Abuja. Many exemptions mirror existing provisions rather than introducing bold new breaks.

Broader economic pressures—fuel prices up over 400% post-subsidy, naira depreciation eroding purchasing power, and unemployment hovering near 35%—dwarf the tax savings for most Nigerians. Questions persist about enforcement, loophole exploitation by elites, and whether projected revenue will translate into tangible public services.

The committee invites public engagement, including nominations for content creators to disseminate verified details via a form closing November 9, 2025. Accurate awareness, they argue, counters misinformation.

Read Also: EXPLAINER: What Trump’s CPC Label Means for Nigeria…