Nigeria’s 36 states and the Federal Capital Territory (FCT) collected N2.64 trillion in Pay-As-You-Earn (PAYE) taxes in 2025, representing a 40.3 per cent increase from N1.88 trillion in 2024.
Data from the National Bureau of Statistics (NBS) show that PAYE accounted for 69.5 per cent of the N3.79 trillion in total tax revenue generated by states and the FCT during the year.
Overall tax revenue rose by 41.2 per cent, from N2.69 trillion in 2024, as governments intensified collection efforts amid increases in salaries and wages following the implementation of the new minimum wage.
PAYE remained the largest source of tax revenue for state governments, significantly ahead of other tax categories.
Withholding tax generated approximately N503 billion, accounting for 13.28 per cent of total tax revenue. Other taxes contributed N300.21 billion, up 48.9 per cent from N201.62 billion in 2024.
Direct Assessment revenue rose by 29.4 per cent to N112.65 billion from N87.05 billion. The category is particularly relevant for high-net-worth individuals and entrepreneurs who may not earn through formal payrolls and are expected to assess and file their taxes themselves.
Stamp duties accounted for 2.94 per cent of total tax revenue, while local government revenue contributed 1.74 per cent, road taxes 1.32 per cent and capital gains tax 0.33 per cent.
Revenue from ministries, departments and agencies (MDAs) also increased by 40.2 per cent to N1.36 trillion from N968.16 billion, representing 26.4 per cent of total internally generated revenue (IGR).
The increase in PAYE collections coincided with higher wage bills across the public and private sectors.
President Bola Tinubu signed the N70,000 national minimum wage into law in July 2024, replacing the previous N30,000 minimum. Several states began implementing the new wage in late 2024 and continued adjustments into 2025.
Kano approved a N71,000 minimum wage effective November 2024, while Katsina adopted N70,000 from December that year. Rivers State began paying N85,000 with November 2024 salaries, while Oyo implemented N80,000 from January 2025.
These adjustments contributed to the context of higher payroll costs during the period, although the figures provided do not establish how much of the increase in PAYE collections was directly attributable to wage changes.
The World Bank also reported that the Federal Government’s personnel expenditure rose to N4.2 trillion in the first half of 2025, from N3.7 trillion in the corresponding period of 2024, following wage adjustments.
Private-sector companies also increased salaries amid inflation and exchange-rate pressures. Data previously reported by Nairametrics showed that staff costs rose by 33.02 per cent at FirstHoldCo, 31.51 per cent at Zenith Bank and 23.80 per cent at MTN Nigeria in 2025.
Despite the wage increases, workers continued to face pressure on their purchasing power amid elevated living costs.
The latest figures highlight the growing importance of tax collection to state finances, with PAYE accounting for more than two-thirds of tax revenue generated by states and the FCT in 2025.
