States Collect ₦2.64tn in PAYE as Worker Tax Revenue Jumps 40.4%

PAYE taxes accounted for 69.5% of state and FCT tax revenue in 2025

Nigeria’s 36 states and the Federal Capital Territory (FCT) collected ₦2.64 trillion in Pay-As-You-Earn (PAYE) taxes in 2025, representing a 40.4% increase from the ₦1.88 trillion recorded in 2024, as higher wages and increased payroll-related collections supported growth in internally generated revenue. Data from the National Bureau of Statistics (NBS), reported by Nairametrics on 12 October 2026, show that PAYE accounted for 69.5% of the ₦3.79 trillion generated through state-level tax collections during the year.

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The increase in PAYE collections formed part of a broader rise in subnational revenue, as states and the FCT recorded total tax revenue growth of 41.2%, from ₦2.69 trillion in 2024 to ₦3.79 trillion in 2025. The figures highlight the importance of employment income taxation to state finances and the growing contribution of payroll deductions to government revenue.

PAYE Remains the Largest Source of State Tax Revenue

PAYE generated the largest share of tax revenue collected by states and the FCT in 2025, significantly exceeding other tax categories recorded in the NBS data.

Withholding tax ranked second, generating approximately ₦503.46 billion, or 13.28% of total tax revenue. Other taxes contributed ₦300.21 billion, representing 7.92%, while direct assessment generated ₦112.65 billion, equivalent to 2.97% of the total.

Stamp duties contributed ₦111.57 billion, while local government revenue accounted for approximately ₦65.9 billion. Road taxes generated ₦49.88 billion, and capital gains tax contributed ₦12.40 billion.

The figures demonstrate the concentration of state tax revenue in PAYE, which is deducted from employees’ taxable earnings and remitted to the relevant tax authorities.

Direct assessment, by contrast, covers individuals whose income tax liabilities are determined outside the standard payroll deduction process, including certain self-employed people and business owners.

Higher Wages Provide Context for Rising Collections

The increase in PAYE revenue coincided with adjustments to minimum wages across Nigeria during late 2024 and 2025.

President Bola Tinubu signed the ₦70,000 national minimum wage into law in July 2024, replacing the previous ₦30,000 minimum. Several state governments began implementing the revised wage in late 2024, while others introduced new pay arrangements during 2025.

Nairametrics reported that Kano approved a ₦71,000 minimum wage effective November 2024, while Katsina approved ₦70,000 from December 2024. Rivers State began paying a minimum wage of ₦85,000 in November 2024, while Oyo State implemented ₦80,000 from January 2025.

Higher salaries can increase the amount of income subject to taxation, depending on an employee’s taxable earnings and applicable reliefs. This provides context for the rise in PAYE collections, although the aggregate figures do not establish how much of the increase resulted directly from wage adjustments.

Private-sector employers also increased salaries during the period as businesses responded to inflation and exchange-rate pressures. Nairametrics cited higher wage bills at several listed companies, including First HoldCo, Zenith Bank and MTN Nigeria, as further evidence of salary adjustments across parts of the economy.

State Revenue Growth Extends Beyond PAYE

The increase in PAYE formed part of a broader expansion in internally generated revenue (IGR) across Nigeria’s subnational governments.

According to the NBS figures reported by Nairametrics, the 36 states and the FCT generated a combined ₦5.15 trillion in IGR in 2025, up approximately 40.9% from ₦3.65 trillion in 2024. The total comprised ₦3.79 trillion in tax revenue and approximately ₦1.36 trillion generated through Ministries, Departments and Agencies (MDAs).

Revenue from MDAs rose from ₦968.16 billion in 2024 to approximately ₦1.36 trillion in 2025, representing an increase of 40.2%.

The growth across tax and non-tax revenue sources suggests that states collected more from several channels during the year. However, the contribution of each source varied across jurisdictions, reflecting differences in their economic activities, revenue systems and administrative capacity.

Lagos remained the largest revenue-generating jurisdiction, recording approximately ₦1.77 trillion in IGR in 2025. Rivers State followed with ₦428.42 billion, while Enugu generated ₦406.77 billion. The FCT recorded ₦356.34 billion.

The distribution illustrates the uneven concentration of revenue across subnational governments, with a small group of jurisdictions accounting for a substantial proportion of total collections.

Implications for Household Spending and Housing Affordability

The rise in PAYE collections has implications for household finances because income taxes affect the amount of salary workers retain after deductions.

Although higher wages can increase tax receipts, the growth in collections does not, by itself, establish that workers experienced an improvement in living standards. Household purchasing power also depends on inflation, housing costs, transport expenses, food prices and other essential expenditures.

For the housing market, these factors influence how much households can allocate to rent, mortgage repayments, utilities and savings for homeownership. Workers whose earnings rise more slowly than their essential expenses may continue to face affordability pressures, even as government revenue from payroll taxation increases.

The NBS figures do not directly measure the impact of PAYE collections on housing demand or affordability. Nevertheless, the data provide an important economic indicator for housing professionals and investors assessing the financial capacity of employed households.

The figures also highlight the importance of distinguishing nominal income growth from improvements in real purchasing power when evaluating housing demand.

Outlook

Nigeria’s states and the FCT recorded substantial growth in tax revenue in 2025, with PAYE contributing nearly seven-tenths of total state-level tax collections. Higher wages and increased payroll-related collections provide context for the increase, while withholding tax, direct assessment and other revenue sources contributed to the broader expansion.

The extent to which this revenue growth translates into stronger public services and improved living conditions will depend on how governments manage and deploy the additional funds. For the housing sector, household purchasing power and the cost of securing accommodation will remain important considerations in assessing whether income growth can support stronger rental demand and homeownership.

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