Tax reforms committee unveils 50 exemptions for low-income earners, SMEs from 2026

The Chairman of the Presidential Fiscal Coverage and Tax Reforms Committee, Mr. Taiwo Oyedele, has introduced a sweeping set of fifty tax exemptions and reliefs geared toward easing the monetary burden on low-income earners, common taxpayers, and small companies, as a part of Nigeria’s new tax reform framework set to take impact on January 1, 2026.

In an announcement launched through his official deal with on X (previously Twitter), Oyedele described the bundle as “one of the vital people-focused tax reforms in Nigeria’s latest historical past,” emphasizing its give attention to equity, simplicity, and inclusiveness throughout the nation’s fiscal system.

In keeping with him, the reforms are designed to scale back tax strain on the poor and productive sectors of the economic system, whereas encouraging compliance and bettering the benefit of doing enterprise.

“From 1 January 2026, the brand new tax legal guidelines will present many reliefs and exemptions for low-income earners, common taxpayers, and small companies,” Oyedele mentioned.

Highlights of the 50 Tax Reliefs and Exemptions

1. Private Revenue Tax (PAYE):

People incomes the nationwide minimal wage or much less might be absolutely exempt.
Annual gross revenue as much as N1.2 million (about N800,000 taxable revenue) might be tax-free.
Decreased PAYE charges for these incomes as much as N20 million yearly.
Presents and donations may also take pleasure in tax exemption.

2. Allowable Deductions and Reliefs for People:

Pension contributions, Nationwide Well being Insurance coverage, and Nationwide Housing Fund contributions stay deductible.
Curiosity on loans for owner-occupied housing, life insurance coverage or annuity premiums, and hire aid as much as N500,000 (20% of annual hire) might be allowed.

3. Pensions and Gratuities:

All pensions, gratuities, and retirement advantages underneath the Pension Reform Act are tax-exempt.
Compensation for lack of employment as much as N50 million won’t be taxed.

4. Capital Features Tax:

Exemption for gross sales of owner-occupied houses, private results value as much as N5 million, and as much as two personal automobile gross sales per 12 months.
Share good points under N150 million yearly or N10 million per transaction might be exempt, whereas reinvested proceeds may also qualify for aid.

5. Corporations Revenue Tax (CIT):

Small corporations with turnover under N100 million and whole fastened property not exceeding N250 million pays 0% CIT.
Startups categorized as “eligible” underneath authorities pointers may also be exempt.
A 50% compensation aid might be granted for wage will increase or transport subsidies to low-income employees.
Agricultural companies will take pleasure in a five-year tax vacation, protecting crop manufacturing, livestock, and dairy.

6. Improvement Levy:

Small corporations are exempt from the 4% improvement levy.

7. Withholding Tax:

Small corporations, producers, and agricultural companies are exempt from withholding tax deductions on their revenue and funds to suppliers.

8. Worth Added Tax (VAT):

Primary meals objects, hire, schooling supplies, healthcare providers, and prescribed drugs will appeal to 0% or exempt VAT standing.
Small companies incomes lower than N100 million yearly won’t cost VAT.
Agricultural inputs, incapacity aids, child merchandise, sanitary towels, electrical automobiles and elements, and humanitarian provides are all VAT-exempt.

9. Stamp Duties:

Digital transfers under N10,000, wage funds, intra-bank transfers, and transfers involving authorities securities or shares might be exempt from stamp duties.

Encouraging Accountable Tax Communication

Past the fiscal reliefs, Oyedele additionally launched an initiative to advertise correct public consciousness in regards to the reforms. He urged Nigerians to appoint social media creators who’ve been educating their audiences in regards to the new tax legal guidelines for a particular “Influencing for Good” coaching program.

In keeping with him, misinformation about taxation spreads quick and sometimes misleads residents, whereas correct and balanced data empowers individuals and builds belief.

“Misinformation spreads quick, typically to the writer’s profit however to the viewers’s loss. Correct data could journey slower, nevertheless it empowers everybody and earns lasting belief,” he mentioned.

What it is best to know

In June, President Bola Tinubu signed into legislation 4 tax reform payments on key areas of Nigeria’s fiscal and income framework.

The 4 payments embody: the Nigeria Tax Invoice, the Nigeria Tax Administration Invoice, the Nigeria Income Service (Institution) Invoice, and the Joint Income Board (Institution) Invoice.