States, FCT Generated ₦5.1trn IGR in 2025 — PAYE Accounted for 51%

Nigeria’s 36 states and the Federal Capital Territory generated about ₦5.1 trillion in internally generated revenue (IGR) in 2025, with Pay-As-You-Earn (PAYE) emerging as a major contributor to state tax collections.

The figure underscores the growing role of taxation, particularly income tax paid by workers, in financing sub-national governments.

According to data from the National Bureau of Statistics (NBS), state-level IGR comprises two broad categories: tax revenue and revenue generated by Ministries, Departments and Agencies (MDAs). Tax revenue includes PAYE, direct assessment, road taxes, stamp duties, capital gains tax, withholding tax and other taxes.

PAYE accounted for approximately 51% of total tax revenue generated by the states and FCT during the year, making it the dominant individual tax category.

The development continues a pattern seen in earlier NBS IGR reports. In 2023, for example, the states and FCT generated ₦2.43 trillion, with PAYE contributing ₦1.24 trillion, or 63.83% of total tax revenue.

The composition of IGR highlights the importance of formal employment and taxable personal income to state finances. It also points to the significance of expanding the tax base, improving taxpayer identification and strengthening digital revenue collection systems.

For state governments, stronger IGR provides a revenue stream that is less directly dependent on federal allocations and can support spending on infrastructure and public services.

The NBS IGR statistics are compiled from official submissions by the state Boards of Internal Revenue and validated through the Joint Tax Board framework.

Why it matters: 

The rising importance of PAYE means that the performance of state finances is increasingly connected to the size and productivity of the formal economy, employment levels and the effectiveness of digital tax administration.