Nigeria’s 36 states and the Federal Capital Territory generated a combined ₦5.15 trillion in internally generated revenue (IGR) in 2025, representing a 40.93 per cent increase from the previous year, according to data from the National Bureau of Statistics (NBS).
The increase was driven largely by Pay-As-You-Earn (PAYE) tax, which remained the biggest source of internally generated revenue for state governments. PAYE is deducted from workers’ salaries and remitted to the relevant tax authorities.
The latest figures show that state governments are generating more revenue internally rather than relying solely on allocations from the Federation Account to fund their activities and public services.
Lagos continued to account for a significant share of the total revenue collected nationwide, contributing more than a third of the combined IGR generated by the states and the FCT.
The rise in internally generated revenue comes amid ongoing tax reforms and efforts by state governments to improve revenue collection systems, expand their tax bases and strengthen digital methods of collecting taxes and other government charges.
However, higher IGR figures do not necessarily mean that states have equal revenue capacity. Differences in population, economic activity, formal employment and business concentration continue to influence how much individual states are able to generate.
The figures provide an indication of the growing importance of internally generated revenue to Nigeria’s subnational governments as they seek to finance infrastructure, salaries and other public expenditure.
