• Lagos accounts for 64% as 36 states, FCT collect N112.6bn
• Sokoto records just N21.7m
Lagos State has emerged as the dominant source of direct assessment tax revenue in Nigeria, accounting for a staggering 64 per cent of the N112.65bn collected from self-employed individuals and largely informal businesses across the 36 states and the Federal Capital Territory in 2025.
An analysis of the latest data released by the National Bureau of Statistics showed that total direct assessment revenue jumped by N25.59bn during the year, rising from N87.05bn in 2024 to N112.65bn in 2025.
But beneath the increase is a striking disparity: while Lagos alone collected N72.41bn, some states struggled to generate even N100m from the same tax category.
The figures provide a fresh snapshot of the enormous differences in taxable economic activity and tax collection across Nigeria's states.
Lagos towers over others
Lagos generated N72.41bn in direct assessment revenue in 2025, up 38.8 per cent from the N52.19bn recorded in 2024.
The state's N20.23bn increase represented about 79 per cent of the entire N25.59bn increase recorded nationwide.
Put differently, Lagos alone contributed almost N2 out of every N3 collected through direct assessment across Nigeria.
Rivers came a distant second with N6.26bn, followed by Ogun with N4.89bn.
The Federal Capital Territory generated N3.21bn, while Benue recorded N2.63bn to complete the top five.
Together, the five jurisdictions generated N89.41bn, representing 79.4 per cent of the nationwide direct assessment revenue.
The remaining 35 states combined generated only N40.23bn—far below Lagos' individual collection.
Sokoto collects N21.7m
The disparity becomes even more striking at the bottom of the table.
Sokoto recorded the lowest direct assessment revenue in 2025, collecting just N21.73m.
Taraba followed with N57.49m, while Ebonyi generated N64.54m. Borno recorded N70.10m and Gombe N132.34m.
The gap between Lagos and Sokoto was therefore more than N72bn.
The figures highlight the uneven depth of the taxable economy across the country, particularly among self-employed Nigerians and informal businesses.
N112bn versus N2.64tn
Despite the increase in direct assessment collections, the tax remains a relatively small source of revenue for state governments.
The states and FCT generated N3.79tn in total tax revenue in 2025, with direct assessment contributing only about three per cent.
By contrast, PAYE generated N2.64tn, accounting for 69.51 per cent of total tax revenue.
Direct assessment also represented just 2.2 per cent of the N5.15tn total internally generated revenue recorded by the states and FCT.
According to the NBS, total IGR rose by 40.93 per cent from N3.65tn in 2024 to N5.15tn in 2025, while tax revenue accounted for 73.64 per cent of the total.
Informal sector remains largely outside tax net
Direct assessment primarily applies to self-employed Nigerians and businesses whose income is not captured through the conventional PAYE system.
The NBS explained that the tax covers self-employed individuals and informal businesses, with assessments based on their income and the scale of their economic activities.
The figures suggest that while state governments are collecting more from this segment, the revenue remains disproportionately concentrated in a handful of jurisdictions.
The development also underscores the difficulty governments face in bringing Nigeria's vast informal economy into the tax system.
The African Development Bank, in its 2025 African Economic Outlook, estimated that Nigeria loses about $8.8bn annually because of the size of its informal economy.
The bank said informal enterprises—including street vendors, smallholder farmers and micro and small businesses—play a significant role in economic activity and employment but remain largely outside the tax system.
With millions of Nigerians earning their livelihoods outside formal employment, the latest figures show that the battle to expand the tax base beyond salaried workers remains a major challenge for state governments.
