States generate N5.15tn as PAYE dominates tax revenue

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The 36 states and the Federal Capital Territory generated N5.15tn in internally generated revenue in 2025, with taxes deducted from workers’ salaries providing the biggest source of tax revenue, according to the National Bureau of Statistics.

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The latest Internally Generated Revenue at State Level report, published on Thursday, showed that total IGR rose by 40.93 per cent from N3.65tn in 2024. This means subnational governments generated about N1.50tn more revenue within one year.

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“The 36 states and the FCT generated a total of N5.15tn in 2025, indicating a growth rate of 40.93 per cent from N3.65tn recorded in 2024,” the NBS said.

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A breakdown showed that tax revenue accounted for N3.79tn, or 73.64 per cent of total IGR, while revenue generated administratively by ministries, departments and agencies stood at N1.36tn, representing 26.36 per cent.

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Pay As You Earn tax was the dominant component, generating N2.64tn. This represented 69.51 per cent of all tax revenue and about 51.3 per cent of the entire N5.15tn collected by states and the FCT.

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In effect, more than N1 of every N2 generated internally by subnational governments came from PAYE, highlighting their continued reliance on formal-sector workers as a major source of domestic revenue.

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The bureau said, “PAYE was the most tax revenue recorded during the period, valued at N2.64tn, representing 69.51 per cent of the total tax revenue collected, while capital gains tax was the least with N12.40bn.”

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The NBS defines PAYE as personal income tax deducted directly from the wages and salaries of employees in the formal sector, with employers responsible for deducting the taxes from their employees’ earnings. Other tax sources captured in the report included direct assessment, road taxes, stamp duties, capital gains tax, withholding taxes, other taxes and local government revenue.

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The report also exposed a wide gap in revenue capacity across states. Lagos generated N1.77tn, the highest in the country and about 34 per cent of the national total. This means roughly N1 in every N3 of IGR collected across the federation came from Lagos.

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Rivers ranked second with N428.42bn, while Enugu emerged third with N406.77bn. The NBS said, “Lagos, Rivers, and Enugu states recorded the highest IGR with N1.77tn, N428.42bn and N406.77bn, respectively over the reference period.”

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The composition of their revenues, however, differed significantly. Lagos collected N1.48tn in taxes and N292.64bn from MDAs, while Rivers generated N414.38bn from taxes and N14.03bn from MDAs. In Enugu, the pattern was reversed, with only N51.52bn coming from taxes while MDAs accounted for N355.25bn.

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The FCT generated N356.34bn, followed by Ogun with N252.36bn and Delta with N202.49bn. Edo recorded N132.21bn, while Oyo, Kano and Akwa Ibom generated N103.25bn, N102.26bn and N100.80bn, respectively.

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At the lower end, Yobe recorded the smallest IGR at N16.01bn, followed by Ebonyi with N17.18bn and Sokoto with N20.48bn. The gap means Lagos generated more than 110 times Yobe’s IGR during the year.

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Taraba generated N28.16bn, Benue N29.57bn, Zamfara N30.07bn and Kebbi N31.23bn, underscoring the sharp differences in taxable economic activity and administrative revenue capacity across states.

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The NBS said the IGR figures were compiled by the Joint Revenue Board from official records and submissions by State Boards of Internal Revenue. It added that the figures were subject to reconciliation and updates by the respective subnational revenue authorities.

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