Nigeria's States Collect N2.64tn in PAYE Tax Revenue

In 2025, Nigeria's 36 states and the Federal Capital Territory collected N2.64 trillion in Pay-As-You-Earn (PAYE) tax, marking a 40.4% increase from N1.88 trillion in 2024. The National Bureau of Statistics reported that PAYE constituted approximately 69.5% of the total tax revenue of N3.79 trillion collected by states.

The overall tax revenue rose by 41.2% from N2.69 trillion in 2024, driven by higher wage payments across sectors due to adjustments in minimum wages and salaries. However, the increase in PAYE collections may also be attributed to improved tax compliance and enforcement.

PAYE remains the primary source of tax revenue for state governments, with withholding tax generating about N503 billion, accounting for 13.28% of total tax revenue. Other tax categories, such as Direct Assessment, which rose to N112.65 billion, also contributed to the revenue, indicating potential for broadening the tax base beyond salaried workers.

The increase coincided with the implementation of a new national minimum wage of N70,000 signed into law by President Bola Tinubu in July 2024.