The Federal Government has officially announced a comprehensive package of 50 new tax exemptions and relief measures, scheduled to take effect from January 1, 2026. This initiative forms a major part of the administration’s broader fiscal reform agenda designed to support low-income households, strengthen the business environment, and stimulate economic activities nationwide.
According to the Chair of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, who shared the update via his official X handle, the new tax regime is a deliberate effort by the government to encourage inclusive economic growth, minimize income inequality, and create more employment opportunities across multiple sectors.
As part of the reforms, individuals earning the national minimum wage or below will be fully exempted from paying Personal Income Tax (PAYE). In addition, annual incomes up to ₦1.2 million — equivalent to a taxable income of around ₦800,000 — will also be tax-free under the new structure.
The new system introduces a progressive PAYE model that lowers tax obligations for individuals earning as high as ₦20 million yearly. The reform also exempts gifts and specific allowances from taxation, further reducing the burden on everyday citizens and supporting financial stability for families and small earners.
Similarly, contributions to the National Pension Scheme, National Health Insurance, National Housing Fund, and premiums for life insurance or annuity policies will continue to enjoy tax-deductible status under the updated framework.
In addition, the plan includes a rent relief provision which grants taxpayers up to 20 per cent of their annual rent as a deductible expense, capped at ₦500,000 per year. Pension payouts, gratuities, and other retirement benefits under the Pension Reform Act remain tax-exempt, ensuring retirees and senior citizens are protected. Compensation for loss of employment up to ₦50 million will also not be taxed, offering better financial security for displaced workers.
For businesses, the reforms provide significant relief for micro and small enterprises. Companies generating less than ₦100 million annually and holding fixed assets not exceeding ₦250 million will be exempt from paying Companies Income Tax, promoting entrepreneurship and investment in local industries.
Essential products such as staple food items, pharmaceuticals and medical supplies, educational materials, agricultural inputs, and selected renewable-energy equipment will either attract zero per cent VAT or be completely exempt from taxation — a move aimed at reducing living costs and empowering key sectors of the economy.
Overall, the Federal Government says the reforms are intended to expand the country’s tax net, streamline tax compliance, attract investment, drive innovation, and support sustainable growth in critical sectors. Stakeholders including business owners, wage earners, and policy analysts have begun reacting, with many describing the measures as a strategic policy move that could help reposition the economy if effectively implemented and monitored.