Are among those asking Is There Any Tax Relief Possible Under the New Tax System? If yes, this guide is all you need to navigate the exemptions allowed in the 2025 tax system.

With the introduction of the 2025 New Tax Regime, many taxpayers—especially small business owners and professionals—are asking an important question:

👉 Will the new tax system allow for any tax relief?

Tax policy changes can be confusing, but understanding what is exempt, what is deductible, and what counts as taxable income is critical for proper planning, compliance, and legally reducing tax liabilities.

Is there a chance for tax relief under the new tax system? YES.

This guide breaks down the key exemptions, allowable deductions, and benefits under the 2025 regime to help individuals and SMEs stay compliant while maximizing tax savings.

Learn more about how to Reduce Taxable Income in a New Regime.

What Are the Deductions Allowed in the New Tax Regime 2025?

The 2025 regime focuses on simplified taxation, which means fewer deductions compared to older frameworks—but several important ones still apply.

Below are the commonly allowed deductions:

1. Standard Deduction (Where Applicable)

Some taxpayers may qualify for the standard deduction applicable to salaried workers or for specific income brackets. This reduces taxable income automatically without requiring detailed documentation.

2. Employment-Related Deductions

Certain expenses incurred for earning employment income may be allowed, depending on the nature of the job and government-approved guidelines. These may include:

• Professional membership fees
• Approved training costs
• PPE or work-related tools

3. Business Expense Deductions for SMEs

Registered businesses can deduct ordinary and necessary expenses, including:

• Rent and utilities
• Staff salaries
• Office supplies
• Marketing expenses
• Professional service fees
• Repairs and maintenance
• Loan interest (if permitted under the regime)

4. Capital Allowances

Businesses that invest in qualifying assets (machinery, equipment, vehicles, industrial tools) can deduct capital allowances to reduce taxable income.

5. Pension Contributions (Employer & Employee)

Approved pension contributions remain deductible, making them one of the most powerful tax planning tools in 2025.

6. Donations to Approved Charitable Organizations

Contributions to government-approved charitable bodies are deductible under applicable rules.

What Are the Exemptions Allowed in the New Tax Regime 2025?

Tax exemptions are specific income categories that the government allows taxpayers to exclude entirely from taxable income.

Below are the key exemptions allowed in 2025 tax system or retained under the new tax regime:

1. Certain Allowances for Low-Income Earners

The 2025 regime may continue to exempt allowances or benefits designed to support low-income workers or vulnerable groups. These may include:

• Housing benefits (within approved limits)
• Transport allowances
• Meal subsidies
• Medical benefits

However, exemptions apply only if they fall within approved thresholds.

2. Pension & Retirement Benefits

The following remain tax-exempt:

• Employer pension contributions (up to allowable limits)
• Lump-sum retirement benefits
• Approved voluntary contributions (subject to time requirements)

3. Income from Certain Government Securities

Interest earned on approved government bonds or treasury instruments is often exempt.

4. Agricultural and Pioneer Sector Incentives

Businesses operating in government-priority sectors may qualify for tax holidays or partial exemptions.

5. SMEs Under Specific Turnover Thresholds

Small companies with turnover within certain limits may be exempt from:

• Company Income Tax
• Minimum Tax
• Some compliance-related fees

These thresholds are determined by the fiscal policy for each year.

6. Disability-Related Income Exemptions

Persons living with disabilities may qualify for income-related exemptions under social protection guidelines.

What Exemptions Are There Under the New Tax System?

To simplify everything discussed above, the main exemptions available under the 2025 tax regime include:

✔ Pension contributions and retirement payouts
✔ Certain employment allowances
✔ Income from approved government securities
✔ Tax holidays for pioneer industries
✔ Exemptions for micro and small businesses (based on turnover)
✔ Disability-related exemptions
✔ Donations to approved charitable organizations
✔ Agricultural sector incentives

These exemptions help reduce taxable income and provide relief to qualifying individuals and businesses.

Is There Any Tax Relief Possible Under the New Tax System?

Yes — the new tax system still provides several tax reliefs, but these reliefs are now more targeted, structured, and compliance-driven. The goal of the updated regime is to simplify taxation while ensuring fairness, especially for low-income earners and small businesses.

Below are the major tax reliefs available:

✅ 1. Relief for Low-Income Earners

Individuals earning below the new minimum taxable threshold (often adjusted annually) continue to enjoy full tax exemption.
This means low-income individuals do not pay Personal Income Tax (PIT), provided their income falls below the exempt limit.

✅ 2. Standard Deductions (Where Applicable)

Depending on the specific country’s framework, the new system may allow:

• A standard deduction, applied automatically
• Personal reliefs for certain mandatory expenses
• Rebate for compliant taxpayers

These reduce taxable income before tax is calculated.

✅ 3. Tax Rebates for Small and Medium-Sized Businesses (SMEs)

Under many modernized tax reforms (including Nigeria’s evolving tax framework):

• Small businesses below a certain annual turnover may enjoy reduced tax rates or full exemption from CIT.
• Startups in priority sectors (technology, agriculture, manufacturing) may qualify for multi-year tax holidays.

✅ 4. Capital Allowances

Businesses can still claim capital allowances for qualifying assets such as:

• Plant & machinery
• Industrial buildings
• IT/technology equipment

These allowances reduce the company’s taxable profits.

✅ 5. Relief for Digital, Export, or R&D Activities

The new system often incentivizes:

• Export-oriented businesses
• Digital service providers
• Companies conducting Research & Development

Such businesses may be eligible for reduced tax rates, investment allowances, or exemptions.

✅ 6. Relief Through Pension & Retirement Contributions

Contributions to approved pension schemes, life insurance, or national savings programs may still be tax-deductible, thereby lowering an individual’s taxable income.

⭐ In Summary

Yes — tax relief is still available, but it is now structured to reward:

• Compliance
• Low-income earners
• Growth-focused SMEs
• Innovation and digital expansion
• Long-term investment in assets

Taxpayers who understand and use these reliefs correctly can legally reduce their tax burden under the new system.

Conclusion: Is There Any Tax Relief Possible Under the New Tax System

So, is there any tax exemption under the new tax regime?
Yes — several exemptions and deductions still apply in 2025, allowing taxpayers to legally reduce taxable income and enjoy reliefs designed to support growth, investment, and social protection.

However, the rules vary depending on income type, business structure, turnover thresholds, and sector classification. Staying compliant requires a clear understanding of what the law allows—and how to apply it correctly.

Need Clarity on the New Tax Regime? We Can Help!

Navigating tax exemptions under the 2025 regime can be confusing, but you don’t have to do it alone.

📌 Skypro Professional Services helps individuals and SMEs understand:

• Which deductions do they qualify for
• What income is exempt
• How to reduce taxes legally
• How to stay compliant with zero penalties

📞 Call/WhatsApp: +234 9064646156
📧 Email: info@skyproservices.com.ng

Let Skypro help you file correctly, save more money, and stay fully compliant.