Nigeria’s 36 states and the Federal Capital Territory (FCT) collected N2.64 trillion in Pay-As-You-Earn (PAYE) tax in 2025, up 40.4% from N1.88 trillion in 2024.
This is according to data from the National Bureau of Statistics (NBS).
PAYE accounted for 69.5% of the N3.79 trillion in total tax revenue generated by states and the FCT during the year.
Total taxes collected by states increased 41.2% to N3.79 trillion from N2.69 trillion as states stepped up tax collections amidst an increase in salaries and wages in line with the new minimum wage and market realities.
PAYE leads states’ tax revenue growth
PAYE remained the largest component of tax revenue collected by states and the FCT in 2025. In Nigeria, state governments are statutorily empowered to collect PAYE from workers who live in a state regardless of where the source of revenue is from.
- Direct Assessment contributed N112.65 billion, representing 2.97% of total tax revenue, while withholding tax was the second-largest component after PAYE. The revenue through this category rose to 29.4% from N87.05 billion in 2024.
- PAYE collections rose 40.3% to N2.64 trillion from N1.88 trillion in 2024, while Direct Assessment increased 29.4% to N112.65 billion from N87.05 billion, an increase of N25.6 billion.
- States see direct assessment as a potential source of income, especially from High-Net-worth Individuals and Entrepreneurs who often do not make up part of payroll. Here, taxpayers are expected to file their taxes after assessing themselves.
- Other taxes rose 48.9% to N300.21 billion from N201.62 billion, accounting for 7.92% of total tax revenue, while withholding tax contributed about N503 billion, or 13.28%.
- Total tax revenue increased 41.2% to N3.79 trillion from N2.69 trillion, with stamp duties accounting for 2.94%, LGA revenue for 1.74%, road taxes for 1.32% and capital gains tax for 0.33%.
- Revenue from Ministries, Departments and Agencies (MDAs) rose 40.2% to N1.36 trillion from N968.16 billion, accounting for 26.4% of total internally generated revenue (IGR).
Taxes accounted for the remaining share of IGR generated by states and the FCT during the year.
Higher wages provide PAYE growth context
The rise in PAYE collections came in a year when wage bills increased across the country. President Bola Tinubu signed the N70,000 minimum wage into law in July 2024, raising it from N30,000, with many states beginning implementation in late 2024 and through 2025.
- Nairametrics previously reported that states adopted higher minimum wages at different points in late 2024 and 2025. Kano approved N71,000 effective November 2024, while Katsina approved N70,000 effective December 2024, alongside adjustments across its public workforce.
- Rivers began paying N85,000 with November 2024 salaries, while Oyo implemented N80,000 effective January 2025. These changes provide context for higher public-sector payrolls during the period.
- See the article on States and Minimum Wage here.
According to the World Bank, the Federal Government’s personnel expenditure in the first half of 2025 increased to N4.2 trillion from N3.7 trillion a year earlier, following wage adjustments.
Most private sector businesses also raised wages to mitigate the impact of higher inflation and exchange adjustments experienced in 2024. Despite this, Nigerians still remain among the least salary earners, with purchasing power under pressure for macroeconomic reforms.
Nairametrics previously reported that several NGX-listed companies recorded higher wage bills in 2025. Wages and salaries rose by 33.02% at FirstHoldCo, 31.51% at Zenith Bank and 23.80% at MTN Nigeria, providing additional context for increased payroll-related tax collections.