By Simpson Global Media News Desk.
Nigeria’s 36 states and the Federal Capital Territory generated a combined ₦5.15 trillion in internally generated revenue in 2025, representing a 40.93 per cent increase from the ₦3.65 trillion recorded in 2024, according to new data released by the National Bureau of Statistics.
The figures provide a fresh picture of Nigeria’s changing subnational revenue landscape, showing a substantial increase in the amount states were able to raise from taxes and other internally generated sources during the year.
Lagos remained by far the largest contributor, generating ₦1.77 trillion, while Rivers and Enugu followed with ₦428.42 billion and ₦406.77 billion respectively.
The Federal Capital Territory generated ₦356.34 billion, while Ogun recorded ₦252.36 billion.
Together, the figures show that a relatively small number of economically active states continue to account for a large share of internally generated revenue, while several states remain dependent on comparatively smaller domestic revenue bases.
The latest data were contained in the National Bureau of Statistics’ 2025 Internally Generated Revenue at State Level report, released on September 24.
The increase comes as Nigerian states face rising responsibilities for infrastructure, healthcare, education, security, transportation and other public services.
For state governments, internally generated revenue is an important source of funding because it provides resources that can be raised within the jurisdiction rather than relying entirely on allocations from the Federation Account.
The new figures, however, also show that the growth in state revenue is uneven.
While Lagos generated almost ₦1.77 trillion, the three states with the lowest reported IGR were Yobe, Ebonyi and Sokoto, which generated ₦16.01 billion, ₦17.18 billion and ₦20.48 billion respectively.
That gap illustrates one of the major economic challenges facing Nigeria’s federal system: states operate under very different economic conditions and therefore have very different capacities to generate their own revenue.
₦5.15 trillion collected in one year
The NBS report puts combined internally generated revenue for the 36 states and the FCT at ₦5.15 trillion in 2025.
That was ₦1.50 trillion more than the ₦3.65 trillion recorded in 2024.
In percentage terms, the increase was 40.93 per cent.
The increase was driven by both tax revenue and receipts generated by Ministries, Departments and Agencies.
NBS classifies state internally generated revenue into two broad categories: tax revenue and revenue generated by government ministries, departments and agencies.
Tax sources include Pay As You Earn, direct assessment, road taxes, stamp duties, capital gains tax, withholding taxes, other taxes and revenue associated with local government areas.
The second category covers revenue generated administratively by state MDAs and related government activities.
The composition of the revenue is significant because it shows that taxation remains the principal foundation of state-level domestic revenue.
NBS data show that tax revenue accounted for 73.64 per cent of total internally generated revenue in 2025.
That means roughly three-quarters of the money raised internally by states came through taxation.
Within tax revenue, Pay As You Earn was the largest component.
PAYE generated ₦2.64 trillion during the year.
The figure represented 69.51 per cent of total tax revenue according to the NBS figures reported by Vanguard, while analysis of the overall IGR shows PAYE represented about 51 per cent of the combined IGR of states and the FCT.
The distinction is important.
PAYE is primarily linked to formal employment and therefore reflects the size and earning capacity of the formal workforce within each jurisdiction.
States with larger concentrations of formal employment, corporate headquarters, financial institutions, government agencies and professional services generally have a larger PAYE base.
Lagos remains the dominant revenue generator
Lagos accounted for approximately ₦1.77 trillion of the combined state and FCT IGR in 2025.
The NBS figure places Lagos at roughly one-third of the entire revenue generated by Nigeria’s states and the FCT.
Lagos generated ₦1.769 trillion, up from about ₦1.26 trillion in 2024.
That represents an increase of roughly 40 per cent in one year.
The state's position reflects the scale and diversity of its economy.
Lagos is Nigeria’s principal commercial centre and has large concentrations of banking, telecommunications, manufacturing, technology, logistics, retail, professional services, entertainment, real estate and other economic activities.
It also has a large formal workforce from which PAYE can be collected.
The state's economic structure gives its revenue authorities access to a much broader tax base than many less urbanised states.
The concentration of revenue in Lagos also illustrates the uneven distribution of economic activity across Nigeria.
A state with a large formal economy can raise substantial revenue through payroll taxation and business-related taxes.
A state where much economic activity takes place informally may have fewer easily identifiable taxpayers and therefore face greater challenges in raising comparable amounts.
Rivers and Enugu follow
Rivers generated ₦428.42 billion in 2025, placing it second among the states and the FCT.
The figure was an increase from ₦317.30 billion in 2024.
Enugu recorded ₦406.77 billion, more than twice its ₦180.50 billion figure for the previous year.
The sharp increase in Enugu’s reported IGR was one of the notable changes in the NBS figures.
The FCT followed with ₦356.34 billion, compared with ₦282.36 billion in 2024.
Ogun recorded ₦252.36 billion, compared with ₦194.93 billion in the preceding year.
These figures place five jurisdictions above the ₦250 billion mark.
They also show how much revenue generation is concentrated among Nigeria’s major economic centres.
Rivers benefits from its position as an important oil-producing and commercial state, while Ogun has become an increasingly important manufacturing and industrial corridor because of its proximity to Lagos.
The FCT's revenue base reflects its position as the country's administrative and political centre, with government, services, construction, hospitality and real estate among major economic activities.
The states at the bottom
At the other end of the scale, the NBS figures show substantial differences in domestic revenue capacity.
Yobe recorded ₦16.01 billion in IGR.
Ebonyi generated ₦17.18 billion.
Sokoto recorded ₦20.48 billion.
The difference between Lagos and the states at the bottom of the table is considerable.
Lagos's ₦1.77 trillion was more than 100 times Yobe's reported IGR.
That does not necessarily mean that one state is collecting taxes more effectively than another.
The figures also reflect differences in population, income, urbanisation, industrial activity, formal employment, commercial activity and the structure of state economies.
States with lower levels of formal employment and industrial activity may have smaller tax bases even when their governments make substantial efforts to improve collection.
This is one reason Nigeria’s fiscal structure continues to involve transfers from the Federation Account.
Domestic revenue can strengthen state finances, but the capacity to raise it varies substantially from one state to another.
Why PAYE matters
The prominence of PAYE in the 2025 figures is particularly important.
PAYE is collected from individuals earning salaries and wages in formal employment.
Its large contribution to state revenue therefore reflects the importance of formal employment to subnational finances.
The NBS reported ₦2.64 trillion in PAYE collections across the states and FCT in 2025.
The amount increased from approximately ₦1.88 trillion in 2024, according to analysis of the NBS data.
The increase suggests that states collected substantially more from formal-sector employees during the year.
But it also highlights a structural limitation.
A state cannot indefinitely increase PAYE collections simply by increasing rates.
The underlying tax base matters.
More formal jobs, higher wages and expanding businesses can increase PAYE receipts.
Conversely, weak economic activity, job losses or movement into informal employment can constrain the revenue source.
That means state revenue growth is closely connected to the health of the wider economy.
Tax revenue accounted for nearly three-quarters of IGR
The NBS report recorded tax revenue of about ₦3.79 trillion across the states and FCT.
That represented 73.64 per cent of total IGR.
Revenue from MDAs accounted for about ₦1.36 trillion, or 26.36 per cent.
The figures demonstrate that taxation is the main engine of domestic revenue generation at the subnational level.
Other tax categories include direct assessment, road taxes, stamp duties, capital gains tax and withholding taxes.
The distribution among these sources varies between states.
An industrial state may receive significant revenue from corporate and employment-related activity.
A state with a large agricultural economy may have a different revenue structure.
A major urban centre may collect substantial taxes associated with property, transport, businesses and formal employment.
Understanding those differences is important when assessing the fiscal position of individual states.
The revenue increase comes amid economic changes
The rise in IGR occurred during a period of major economic adjustment in Nigeria.
States have been operating in an environment characterised by reforms to monetary policy, changes in fuel pricing, efforts to increase tax compliance, exchange-rate adjustments and changes in federal revenue distribution.
The national economy recorded growth in the second quarter of 2026, with the NBS reporting 4.43 per cent real GDP growth compared with the same quarter of 2025.
Inflation also moderated to 15.39 per cent in August 2026, according to NBS data reported earlier this month.
Those national indicators provide context for the revenue figures, although the relationship between economic growth and state IGR is not uniform across jurisdictions.
A state with a large formal economy may benefit more quickly from stronger corporate activity and employment.
A state heavily dependent on informal economic activity may experience a different pattern.
More revenue does not automatically mean stronger public finances
The increase in IGR is an important fiscal development, but revenue figures alone do not show how effectively state governments use the money.
Higher internally generated revenue provides governments with more resources.
But those resources must then be allocated among competing priorities.
States have responsibilities involving schools, hospitals, roads, water systems, waste management, public transportation, security support, civil-service salaries and other services.
They also have capital projects and debt obligations.
The amount of money raised therefore does not by itself establish how much is available for development spending.
A state could increase revenue while simultaneously facing higher operating costs.
Similarly, revenue could rise because of inflation or changes in collection rather than a proportional expansion of real economic activity.
For that reason, IGR data are most useful when examined alongside expenditure, debt, service delivery and economic output.
What the figures say about Nigeria’s fiscal structure
Nigeria's federal system distributes responsibilities and revenue among federal, state and local governments.
States therefore combine their internally generated revenue with allocations received through the Federation Account and other transfers.
The new NBS data show that internally generated revenue has become a substantial component of subnational finances, but the distribution remains highly unequal.
The five jurisdictions generating more than ₦250 billion each accounted for a large share of the ₦5.15 trillion national total.
Meanwhile, several states generated less than ₦50 billion.
This creates different fiscal realities across the federation.
A state with a large domestic revenue base has more room to finance projects from its own resources.
A state with limited IGR may depend much more heavily on federal allocations.
That difference can affect the ability of governments to respond to economic shocks or finance long-term infrastructure.
Federal allocations remain important
The new IGR figures do not mean states have become financially independent of the federal government.
Recent NBS figures on Federation Account allocations demonstrate the continuing importance of federal revenue distribution.
According to NBS data released on September 25, the three tiers of government received ₦3.40 trillion through FAAC in June 2026, compared with ₦3.18 trillion in May.
The two months together accounted for ₦6.58 trillion in allocations.
June's distribution included ₦818.68 billion for the Federal Government, ₦759.14 billion for the states and ₦534.28 billion for the 774 local government councils, alongside other statutory and special allocations.
That illustrates the two sides of Nigeria's subnational fiscal system.
States are raising increasing amounts from their own economies, but they continue to receive significant transfers from centrally collected revenue.
The growth of IGR therefore complements rather than replaces federal allocations.
Why states are seeking stronger tax systems
Improving IGR can provide states with greater predictability.
Federal allocations can fluctuate depending on oil revenue, exchange rates, commodity prices and other factors affecting Federation Account receipts.
A state with a diversified domestic revenue base may have another source of funding when federal revenue changes.
But expanding IGR also requires careful attention to the tax burden on businesses and households.
Tax authorities need to increase compliance without creating excessive costs for legitimate businesses.
That is particularly important for small and medium-sized enterprises.
Businesses already face expenses involving electricity, transportation, logistics, security, financing and regulation.
Multiple or overlapping state and local government levies can increase the cost of doing business.
A sustainable revenue system therefore needs both effective collection and a broad economic base.
The informal economy remains a major issue
One of Nigeria's biggest challenges in expanding domestic revenue is the size of its informal economy.
Many businesses operate outside conventional tax and registration systems.
That can make them difficult for government agencies to identify and assess.
The challenge is particularly important for states that do not have large formal corporate sectors.
Digital tax administration can help authorities improve identification and collection.
But the process also requires accurate taxpayer records, reliable databases and mechanisms for resolving disputes.
States increasingly use digital platforms for tax registration and payment.
The expansion of digital payments can also create more information about economic activity.
However, improved tax administration needs to be accompanied by public confidence that revenue is being used effectively.
Tax compliance is influenced not only by enforcement but also by perceptions of fairness and the quality of public services.
The role of economic growth
The most sustainable route to higher IGR is generally an expanding economy that creates more businesses and formal jobs.
When businesses grow, they can generate more taxable activity.
When employment increases, PAYE collections can expand.
When property development grows, related taxes and fees can increase.
When trade expands, states may collect more from associated economic activities.
This creates an important link between revenue policy and economic development.
State governments seeking higher IGR therefore face a dual task.
They must improve collection from existing economic activity.
They must also create conditions that allow new economic activity to emerge.
Infrastructure, security, reliable electricity, transportation and regulatory efficiency can influence business decisions.
A state that attracts new factories and companies may eventually expand its tax base.
Lagos illustrates the concentration effect
Lagos's ₦1.77 trillion provides a clear illustration of the connection between economic concentration and revenue generation.
The state contains a large share of Nigeria's corporate headquarters, financial institutions, technology companies, industrial operations and service businesses.
It also has extensive property and commercial activity.
The concentration of these activities creates a substantial pool from which state authorities can collect taxes and other revenue.
But the same concentration creates pressure on infrastructure.
Lagos must finance roads, drainage, transportation, waste management, water systems and other services for a very large population and economic community.
Higher revenue therefore comes with higher demands for public spending.
This is one reason revenue statistics must be interpreted alongside expenditure requirements.
Rivers and the role of natural resources
Rivers' position near the top of the IGR table also reflects the economic importance of the Niger Delta.
Oil and gas production has historically played a major role in the state's economy.
The state also has significant commercial, industrial and maritime activity.
But dependence on natural resources can create fiscal challenges.
Commodity prices can change.
Production can fluctuate.
Energy-sector reforms can alter investment patterns.
States therefore face pressure to broaden their economic bases beyond traditional sources.
The same principle applies to other resource-producing jurisdictions.
The long-term question is whether natural-resource revenue can be used to develop infrastructure and industries capable of generating broader domestic revenue.
Enugu’s rapid rise
Enugu's movement from ₦180.50 billion in 2024 to ₦406.77 billion in 2025 represents one of the sharpest increases among the leading jurisdictions.
The state's 2025 figure more than doubled its previous year's reported IGR.
The change illustrates how state-level revenue rankings can shift when collection systems, economic activity or reporting improve.
It also shows why a single year's ranking should not automatically be treated as a permanent measure of economic strength.
Revenue performance can change as states introduce new policies, improve administration or experience shifts in business activity.
The NBS data provide a snapshot of the fiscal position during the reference year.
Longer-term trends require several years of comparable data.
The gap between states remains significant
Despite the nationwide increase, the revenue gap between states remains one of the most striking features of the data.
The highest-earning jurisdiction generated more than ₦1.7 trillion.
The lowest recorded less than ₦17 billion.
That disparity has implications for the capacity of state governments to finance development from domestic sources.
States with smaller economies may need larger transfers or targeted federal and development support.
At the same time, states with greater economic potential may be expected to strengthen their own revenue systems.
The challenge is to balance incentives for domestic revenue mobilisation with the need to ensure that citizens in less economically developed states have access to basic public services.
What the figures mean for businesses
For companies operating across Nigeria, changes in state IGR can affect the regulatory and tax environment.
Businesses may face different tax structures and administrative requirements in different jurisdictions.
The increase in IGR means state governments are likely to remain focused on improving collection.
That can produce more predictable digital tax systems and broader taxpayer registration.
But businesses will also watch for overlapping taxes and levies.
A more efficient revenue system should ideally make compliance easier rather than simply increasing the number of charges.
The relationship between state governments and the private sector will therefore remain important.
States need businesses because businesses generate employment and tax revenue.
Businesses need governments to provide infrastructure, security, regulation and public services.
The revenue relationship works best when both sides benefit from a growing formal economy.
What the figures mean for households
For households, the impact of higher state revenue depends on how the money is used.
A larger revenue base can provide governments with additional resources for schools, hospitals, roads, water and transportation.
But households are also the source of much of the tax revenue.
PAYE comes directly from formal-sector workers.
Other taxes and charges can affect consumers and businesses indirectly through prices.
This creates an important policy balance.
States need revenue to provide services.
But tax burdens must remain compatible with household incomes and business activity.
If taxes rise faster than economic capacity, businesses may face pressure and consumers may bear higher costs.
If collection improves through better compliance and a broader economic base, governments can increase revenue without necessarily relying only on higher tax rates.
The importance of data
The NBS report also demonstrates the growing importance of reliable fiscal data.
Accurate information allows policymakers to compare states, identify trends and assess changes in revenue performance.
It also provides investors and businesses with a clearer picture of subnational economic activity.
The figures can help governments identify weaknesses in their revenue systems.
A state with very low IGR can examine whether the problem is a small economic base, weak tax administration, high informality or limited taxpayer registration.
A state with rapidly increasing IGR can study which measures produced the change.
Better data can therefore support more targeted fiscal reforms.
The road ahead for state finances
The next challenge for Nigerian states is converting higher revenue collection into sustainable fiscal capacity.
That requires more than increasing tax bills.
States need to widen their economic bases.
They need to support businesses that create formal jobs.
They need efficient tax administration.
They need reliable taxpayer databases.
They need to reduce duplication in revenue collection.
They need transparent financial management.
And they need to demonstrate that public revenue is being converted into useful services and infrastructure.
The 2025 IGR figures provide evidence that states are already generating substantially more domestic revenue than they did a year earlier.
The question now is whether that growth can continue without placing excessive pressure on taxpayers.
A changing subnational business environment
The increase from ₦3.65 trillion to ₦5.15 trillion is large enough to change the fiscal conversation around Nigeria's states.
It shows that subnational governments can mobilise significant resources from their own economies.
But it also exposes the continuing concentration of economic activity.
Lagos alone generated approximately one-third of the combined IGR.
Rivers and Enugu were next, while several states remained below ₦50 billion.
The figures therefore reveal both progress and structural differences.
For policymakers, the objective is not necessarily to make every state generate identical amounts.
The economies of the states are different.
Instead, the challenge is to build stronger and more sustainable domestic revenue systems appropriate to each state's economic structure while maintaining access to essential public services across the federation.
Revenue growth and economic development must move together
The long-term significance of the new NBS figures will depend on whether rising IGR accompanies broader economic development.
Revenue growth is more sustainable when it comes from more businesses, more jobs, higher productivity and greater formalisation.
That creates a cycle in which economic activity produces revenue, and revenue can then be invested in infrastructure that supports additional economic activity.
But if revenue growth comes primarily from increasingly aggressive taxation of an unchanged economic base, the effect can be different.
Businesses may face higher costs.
Households may have less disposable income.
Informal activity may become more attractive.
That is why the composition of revenue matters as much as the headline number.
The 2025 figures show strong growth.
The next question is the quality and sustainability of that growth.
A stronger fiscal base, but an uneven one
Nigeria's subnational governments entered 2026 with a substantially larger domestic revenue base than they had a year earlier.
The combined ₦5.15 trillion generated in 2025 represents a major increase in internally mobilised resources.
Yet the distribution of that revenue remains heavily concentrated.
Lagos generated ₦1.77 trillion.
Rivers and Enugu each exceeded ₦400 billion.
The FCT and Ogun crossed ₦250 billion.
At the other end, Yobe, Ebonyi and Sokoto were below ₦21 billion.
Those figures capture the enormous variation in economic capacity across Nigeria's 36 states and the FCT.
The challenge for the coming years will be to expand productive economic activity across more parts of the country while improving the efficiency and fairness of domestic revenue collection.
What happens next
The NBS data are likely to remain relevant as states prepare their budgets and medium-term fiscal plans.
Governments will examine their revenue performance against expenditure needs.
Businesses will monitor changes in tax administration and state-level charges.
Investors will watch jurisdictions where economic activity and infrastructure are expanding.
And policymakers will continue to debate how Nigeria can reduce dependence on centrally distributed revenue by strengthening the productive capacity of states.
The 2025 results provide a substantial starting point.
But the next test is whether the increase can be sustained.
States will need to maintain revenue collection while avoiding measures that discourage investment or formal employment.
They will also need to demonstrate that additional revenue improves public services.
The broader business picture
Nigeria's latest IGR figures offer a snapshot of an economy in transition.
Subnational governments are raising more money from domestic sources.
Tax administration is becoming increasingly important.
Formal employment remains central to state revenue through PAYE.
Economic concentration continues to shape the fiscal strength of individual states.
And the dependence on federal transfers remains significant.
The ₦5.15 trillion collected in 2025 is therefore more than a revenue statistic.
It is an indicator of the relationship between Nigeria's businesses, workers, households and state governments.
Every increase in internally generated revenue ultimately reflects economic activity being brought into the formal revenue system.
The challenge is to ensure that this process supports, rather than constrains, economic growth.
For states with large commercial bases, that means making it easier for businesses to expand and create jobs.
For states with smaller economies, it means developing sectors capable of widening the tax base.
For all states, it means improving collection systems while maintaining public confidence.
The latest NBS figures show that the domestic revenue capacity of Nigeria's states is growing.
The next phase will be about whether that growth can be translated into stronger state finances, better infrastructure and a broader economic base.
With ₦5.15 trillion now recorded for 2025, Nigeria's subnational governments have demonstrated that significant revenue can be generated within the states.
The bigger business question is how much further that revenue base can expand — and what economic transformation will follow from it.
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