Nigerian Government Confirms Tax Exemption for Bond Income in 2026

The Nigerian government has confirmed that income from federal and state bonds will not be taxed in 2026, maintaining the tax exemption for bondholders under the Nigeria Tax Act 2025. This clarification comes amidst investor concerns and confusion regarding the potential impact of a new tax regime on bond earnings.

The Debt Management Office (DMO) will continue to pay investors the full coupon amount without tax deductions, ensuring that pension funds and investors in government bonds remain tax-exempt. The new tax act also exempts the sale and transfer of government bonds from value-added tax (VAT), providing further relief to bondholders.