Nigeria’s 36 state governments received a combined N551.77 billion as their share of Value Added Tax (VAT) revenue in January 2026, marking a sharp rise following the implementation of the Federal Government’s new tax sharing framework.
Data presented by the Federation Account Allocation Committee (FAAC) showed that the amount represents a 30.4 percent increase compared with the N423.25 billion shared by states in December 2025.
The increase comes as the country begins distribution under the newly introduced tax laws, which altered the VAT sharing formula among the three tiers of government.
Under the revised arrangement, the Federal Government now receives 10 percent of net VAT, down from the previous 15 percent, while states’ share increased to 55 percent, up from 50 percent. The 35 percent allocation to local governments remains unchanged.
Figures from the Nigeria Revenue Service indicated that total VAT collections rose to N1.08 trillion in January, up from N913.96 billion in December 2025. After deductions at source amounting to N79.9 billion, the net VAT available for distribution stood at about N1 trillion.
From the net amount, the Federal Government received N100.32 billion, representing its new 10 percent share, while states collectively received N551.77 billion. Local governments were allocated N351.13 billion.
The Federal Government’s allocation represents a decline from N126.98 billion received in December under the old formula, translating to a drop of N26.65 billion, or about 21 percent.
States, however, recorded a significant gain. Their combined share rose by N128.52 billion, from N423.25 billion in December to N551.77 billion in January.
Local governments also saw an increase in their allocation, receiving N351.13 billion in January, compared with N296.28 billion in December, representing an 18.5 percent rise.
Meanwhile, the cost of revenue collection also increased during the period. The revenue service reported N43.33 billion as collection cost in January, up 32.4 percent from N32.72 billion recorded in December.
Other statutory deductions included 3 percent to the North East Development Commission (NEDC) project account, which rose to N31.20 billion from N26.32 billion. The 0.5 percent deduction for the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) also increased to N5.42 billion from N4.57 billion.
Combined deductions to the two agencies amounted to N36.61 billion in January, compared with N30.89 billion in December, reflecting a month-on-month increase of N5.72 billion.
FAAC’s broader revenue summary showed that total funds available for distribution in January across revenue lines stood at N3.04 trillion. After total deductions of N1.14 trillion, the net distributable revenue stood at N1.90 trillion.
Of this amount, N896.78 billion came from statutory revenue, while N1 trillion was from net VAT.
When both revenue sources were combined, the Federal Government received N525.23 billion, while state governments received N767.29 billion. Local governments were allocated N517.28 billion, while the 13 percent derivation share stood at N90.19 billion.
A breakdown of VAT allocations among states showed Lagos State remaining the largest beneficiary, with N111.22 billion in gross VAT allocation. After deductions of N9.89 billion, the state retained N101.34 billion, while its local governments collectively received N70.57 billion.
Other top recipients included Oyo State with N24.04 billion, Rivers State with N23.57 billion, Kano State with N17.37 billion, and the Federal Capital Territory with N15.76 billion.
Also among the higher allocations were Bayelsa State with N15.07 billion, Katsina State with N13.82 billion, Jigawa State with N12.92 billion, Delta State with N12.89 billion, and Kaduna State with N12.73 billion.
States with relatively lower allocations included Ekiti State with N9.83 billion, Nasarawa State with N9.77 billion, Ebonyi State with N9.45 billion, and Taraba State with N9.37 billion.
