By Tolu Meduna
“Starting in January 2026, Nigerians will benefit from a sweeping set of 50 new tax exemptions aimed at easing financial burdens, especially for low-income earners and small businesses. For individuals, those earning the national minimum wage or less, and up to ₦1.2 million annually, will be fully exempt from personal income tax.”
In a recent National Orientation Agency (NOA) Dialogue XSpace session, Mr. Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, laid bare the government’s commitment to President Bola Ahmed Tinubu’s popular pledge: “Let the poor breathe.” The phrase encapsulates a new era in Nigeria’s fiscal policy-one designed to relieve the burden of taxes on the vulnerable and shift the focus towards inclusive growth and national development.
Speaking on the topic, “Simplifying Nigeria’s Tax System: Building Public Trust and Inclusive Growth Through Transparent Fiscal Reforms,” Mr. Oyedele explained that the forthcoming tax reforms, set to begin in January 2026, are transformative. The reforms reduce the number of taxes from over sixty to fewer than ten, harmonize tax collection across federal, state, and local governments, and introduce digital administration to curb corruption. Most importantly, the new system exempts low-income earners, removing personal income tax on monthly earnings up to ₦100,000, thereby directly lifting millions of Nigerians out of the tax net.
The reforms also take aim at value-added tax (VAT) on essentials such as bread, education, and healthcare. Transitioning from VAT exemption to VAT zero-rating on these goods allows producers to reclaim input VAT, reducing costs and making vital services more affordable. Additionally, small businesses earning below ₦100 million annually will enjoy full exemption from corporate taxes, VAT, and withholding tax, encouraging formalization and economic participation among entrepreneurs who have long struggled under heavy tax burdens.
Mr. Oyedele addressed widespread misconceptions, cautioning that misinformation threatens to undermine public confidence. He stressed that many Nigerians continue to pay taxes from which they are legally exempt simply because they are unaware. Furthermore, diaspora Nigerians are not subject to taxation on income earned abroad or on remittances sent home, dispelling fears of double taxation. The reforms also recognize the realities of the digital economy, requiring digital freelancers and remote workers to comply with existing tax laws, now enforced more effectively through digital tracking and international cooperation.
One of the critical innovations of the reform is digitization, which promises to eliminate corruption and multiple taxation that have plagued Nigeria’s tax system. By automating processes and creating a Tax Ombudsman office, the government aims to shield taxpayers from harassment and foster trust in the system. The reforms further target wealthy individuals and large corporations, encouraging fair contribution while protecting the poor from undue tax pressures. This targeted approach aligns with President Tinubu’s vision to “not tax poverty” but to tax wealth for national development.
On investment concerns, the new capital gains tax (CGT) provisions were clarified to remove previous unfair burdens on investors. Taxes will now be levied only on net positive returns after accounting for losses and exchange rate fluctuations, encouraging reinvestment and long-term market growth. This positions Nigeria’s capital market competitively against other African markets and signals a welcoming environment for both local and foreign investors. Despite the recent downturn coinciding with reform announcements, officials emphasize that the reforms will stabilize and stimulate the market over time.
As the session concluded, Mr. Oyedele urged Nigerians to embrace the reforms by educating themselves and others, engaging in public consultations, and utilizing tools provided by the government for compliance. The reforms mark a decisive step towards equitable taxation, economic inclusion, and sustainable development-hallmarks of President Tinubu’s administration fulfilling its promise to create a fairer Nigeria where the poor are relieved, businesses thrive, and national growth is shared by all.
Starting in January 2026, Nigerians will benefit from a sweeping set of 50 new tax exemptions aimed at easing financial burdens, especially for low-income earners and small businesses. For individuals, those earning the national minimum wage or less, and up to ₦1.2 million annually, will be fully exempt from personal income tax. Additionally, important deductions such as pension contributions, National Health Insurance, National Housing Fund payments, and rent relief up to ₦500,000 will further reduce taxable income. Gifts, pension, retirement benefits, and compensation for job loss up to ₦50 million will also be exempt, helping Nigerians keep more of their earnings and savings.
Small businesses and startups are major beneficiaries of the reforms, with income tax exemptions extended to labelled startups and agricultural companies granted a five-year tax holiday. Withholding tax (WHT) has been removed for small companies, manufacturers, and those in agriculture, improving cash flow and reducing operational costs. VAT exemptions have been expanded to cover basic food items, house rent, education, pharmaceuticals, and essential agricultural inputs, while stamp duty charges on many small electronic transfers and salary payments will be eliminated to ease everyday transactions.
Overall, the reforms seek to simplify the tax system and stimulate economic growth by protecting vulnerable groups and encouraging business formalization. By reducing or removing taxes on essentials and providing incentives for startups and farmers, the government aims to foster inclusive development and improve living standards across Nigeria, fulfilling the promise to not tax poverty but rather use taxation as a tool for sustainable national growth.
*Tolu Meduna , Special Assistant on Media in the office of the Director General of National Orientation Agency