29/12/2025
The new tax laws taking effect on January 1, 2026, introduce significant exemptions. Under the new regime, the tax system is designed to be progressive—meaning the lowest earners pay nothing, while higher earners pay more.
​Here are the specific categories of people and businesses that will generally be exempt from paying income tax starting in 2026:
​1. Low-Income Earners
​Minimum Wage Earners: Anyone earning the National Minimum Wage or less is completely exempt from Personal Income Tax (PAYE).
​Annual Income Below ₦800,000: If your total annual income is ₦800,000 or less (approx. ₦66,000 monthly), you will pay 0% tax.
​Note: Due to new consolidated reliefs, individuals earning a gross income of up to ₦1.2 million annually may also effectively fall into the zero-tax bracket once statutory deductions (pension, NHF, health insurance) are removed.
​2. Small Business Owners
​Turnover Threshold: Small companies with an annual turnover (total sales) of ₦100 million or less are exempt from paying Companies Income Tax (CIT).
​Condition: The company must also have total fixed assets of less than ₦250 million.
​VAT & Withholding Tax: These small businesses are also largely exempt from the administrative burden of charging VAT and suffering Withholding Tax deductions on their business income.
​3. Retirees and Pensioners
​Pensions & Gratuities: All income received as pension, gratuity, or retirement benefits remains 100% tax-free.
​Loss of Job Compensation: If you lose your job, any compensation paid to you for "loss of employment" is tax-exempt up to ₦50 million.
​4. Specialized Sectors & Startups
​Farmers: New agricultural businesses (crop production, livestock, dairy) are granted a tax holiday for their first 5 years of operation.
​Tech Startups: "Labeled" startups (those officially recognized under the Startup Act) are exempt from income tax to encourage innovation.
​5. Specific Transactions (Capital Gains)
​You will not pay Capital Gains Tax (tax on profit from selling an asset) in the following specific cases:
​Selling Your Home: Profit made from selling your primary residence (owner-occupied house).
​Selling Personal Cars: Sale of up to two private vehicles per year.
​Small Investments: Gains from selling stocks/shares if the total sales proceeds are below ₦150 million in a year (or if the profit is less than ₦10 million).
​Summary: Who Pays What?
