FG unveils sweeping tax reforms to ease burden on Nigerians

FG unveils sweeping tax reforms to ease burden on Nigerians

The Federal Government has announced a comprehensive overhaul of Nigeria’s tax system, introducing 50 targeted exemptions and reliefs aimed at easing the financial burden on low-income earners, middle-class taxpayers, and small businesses. The new tax laws will take effect from January 1, 2026.

The reforms are encapsulated in four landmark legislations: the Nigeria Tax Act, 2025 (NTA); Nigeria Tax Administration Act, 2025 (NTAA); Nigeria Revenue Service (Establishment) Act, 2025 (NRSEA); and the Joint Revenue Board (Establishment) Act, 2025 (JRBEA).

Economic Boost and Social Protection

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that the new tax regime is designed to stimulate economic growth, enhance business development, and increase the purchasing power of Nigerians.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, echoed the sentiment in a post on X, saying the reforms will deliver meaningful relief to vulnerable groups and small enterprises.

“From 1 January 2026, the new tax laws will provide many reliefs and exemptions for low-income earners, average taxpayers, and small businesses,” Oyedele said.

Highlights of the 50 Tax Exemptions and Reliefs

Personal Income Tax (PAYE):

• Exemption for individuals earning the national minimum wage or less
• Tax-free status for annual gross income up to ₦1.2 million
• Reduced PAYE for earners of ₦20 million annually
• Gifts exempt from taxation

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Allowable Deductions:

• Pension, health insurance, and housing fund contributions
• Interest on loans for owner-occupied housing
• Life insurance premiums
• Rent relief up to ₦500,000
• Retirement benefits and compensation for job loss up to ₦50 million

Capital Gains Tax:

• Exemption on sale of owner-occupied homes and personal effects under ₦5 million
• Tax-free sale of up to two private vehicles annually
• Gains on shares below ₦150 million or reinvested proceeds
• Exemptions for pension funds, charities, and religious institutions

Companies Income Tax:

• Zero percent tax for small companies (turnover ≤ ₦100 million)
• Tax holidays for agricultural businesses
• Reliefs for startups and employment incentives
• Additional deductions for salary increases and transport subsidies

Development Levy and Withholding Tax:

• Small companies exempt from 4% development levy
• Exemptions on withholding tax for manufacturers, agric businesses, and supplier payments

Value Added Tax (VAT):

• Zero VAT on basic food, education, health services, pharmaceuticals, baby products, sanitary items, and disability aids
• Exemptions for rent, transport, electric vehicles, humanitarian supplies, and agricultural inputs
• Small companies exempt from charging VAT

Stamp Duties:

• Exemptions on electronic transfers below ₦10,000, salary payments, intra-bank transfers, and securities transactions

Influencer Training for Tax Education

To combat misinformation and promote public understanding of the reforms, Oyedele announced a nationwide initiative to train 20 content creators on accurate tax education. Nigerians are encouraged to nominate influencers by tagging them or submitting names via the official form before November 9, 2025.

“Misinformation spreads fast, often to the author’s benefit but to the audience’s loss. Accurate information may travel slower, but it empowers everyone, and earns lasting trust,” Oyedele said.

The new tax regime marks a significant shift in Nigeria’s fiscal policy, aiming to foster inclusivity, economic resilience, and transparency in tax administration.

FG unveils sweeping tax reforms to ease burden on Nigerians