Nigeria’s 36 states and the Federal Capital Territory (FCT) generated ₦2.64 trillion from Pay-As-You-Earn (PAYE) taxes in 2025, representing a significant increase from the ₦1.88 trillion recorded in 2024.
Data from the National Bureau of Statistics (NBS) showed that PAYE accounted for approximately 69.5 per cent of the ₦3.79 trillion in total tax revenue collected by state governments and the FCT during the year.
Overall tax revenue rose by 41.2 per cent, increasing from ₦2.69 trillion in 2024 to ₦3.79 trillion in 2025, as subnational governments intensified revenue collection amid changes in wages and economic conditions.
Withholding tax remained another major contributor, generating approximately ₦503 billion, equivalent to 13.28 per cent of total tax revenue. Collections from this source increased from ₦388.05 billion in the previous year.
Revenue from other taxes also recorded substantial growth, climbing by 48.9 per cent to ₦300.21 billion from ₦201.62 billion in 2024.
Direct assessment taxes increased by 29.4 per cent, rising from ₦87.05 billion to ₦112.65 billion. This category is particularly relevant to entrepreneurs and high-income earners whose earnings may not be covered by regular payroll deductions.
The growth in PAYE collections coincided with salary adjustments across the country following the introduction of the ₦70,000 national minimum wage in 2024. Several state governments implemented higher wage structures during late 2024 and throughout 2025, increasing payroll expenditure.
Federal Government personnel spending also rose during the period. World Bank figures indicated that personnel expenditure reached ₦4.2 trillion in the first half of 2025, compared with ₦3.7 trillion during the corresponding period in 2024.
Private sector companies also increased wages in response to inflation and exchange-rate pressures, contributing to higher payroll-related tax collections.
Despite the increase in tax revenue, many Nigerian workers continue to face pressure on their purchasing power as the cost of living remains high. The rising collections highlight the expanding revenue base of state governments, although higher tax receipts do not necessarily translate into improved living standards for workers.
