Lagos, Nigeria’s startup capital, made ₦1.26 trillion ($857.57 million) in internally generated revenue in 2024, a 54.63% increase from the ₦815.87 billion ($554.59 million) it made in 2023.
This is more than the ₦1.24 trillion ($841.97 million) combined IGR of 31 other states in 2024. The states include Edo, Akwa Ibom, Kwara, Kano, Kaduna, Bayelsa, Jigawa, Oyo, Osun, Cross River, Ondo, Katsina, Abia, Anambra, Ekiti, Niger, Plateau, Kogi, Zamfara, Nassarawa, Bauchi, Imo, Borno, Benue, Adamawa, Sokoto, Gombe, Taraba, Kebbi, Ebonyi, and Yobe.
Lagos is Nigeria’s richest state, with a labour force population of 6.43 million in 2023, dominated by those between the ages of 15 and 34 (2.7 million), making Pay As You Earn (PAYE) its most valuable income stream. PAYE is the tax deducted directly from salaries, and it contributed ₦705.41 billion ($479.52 million) to Lagos’s revenue in 024, 58.62% more than the ₦444.73 billion ($302.32 million) earned in 2023.
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By contrast, the 31 states mentioned above made ₦497.95 billion ($338.49 million) combined from PAYE.
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Every tax payment fuels the state’s revenue engine. Calculate your **estimated** annual PAYE contribution to Lagos’s ₦705 billion haul using an **estimated 15% effective tax rate**.
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*Disclaimer: This tool uses a simplified 15% effective tax rate on gross income for illustration. Actual PAYE is calculated using the Personal Income Tax Act (PITA) progressive bands, reliefs, and exemptions and will vary.
Lagos is home to over 500 startups and attracts over half of Nigeria’s startup investments. Thousands of young people work in tech hubs from Yaba to Lekki, building products, running support teams, and contributing to the state’s tax engine.
“Thousands of our youths are busy at tech hubs, using technology to resolve everyday challenges. We will keep encouraging them,” Lagos Governor, Babajide Sanwo-Olu, said in May, after Lagos was recognised by Dealroom.co, a Netherlands-based research firm, as Africa’s fastest-growing tech ecosystem.
The state is set to commit about 1.5% of its annual capital budget to an innovation fund as it seeks to expand its startup ecosystem.
In 2024, the state’s Commissioner for Information, Gbenga Omotoso, disclosed that about six million people pay tax in Lagos, with 4.5 million active and consistent, and 90% paying PAYE.
In Q1 2025 alone, PAYE already made up 73% of the ₦333.29 billion the state collected in revenue, according to the Commissioner for Finance, Abayomi Oluyomi.
“The primary contributor to IGR remains the Pay-As-You-Earn (PAYE) tax, collected by the Lagos Inland Revenue Service (LIRS),” according to a 2025 Lagos policy document, which itemises how the state plans to enhance revenue generation.
Despite this revenue growth, Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said in March 2025 that Lagos’s revenue collection is still less than 2% of its GDP.
One of the pathways he suggested for increasing revenue involves the further expansion of personal income tax to the state’s digital and creative industries.
From 2026, new tax laws in Nigeria will capture remote workers and freelancers under the personal income tax net, meaning more revenue for Lagos, where most of the country’s digital economic activity happens.
Mark your calendars! Moonshot by TechCabal is back in Lagos on October 15–16! Meet and learn from Africa’s top founders, creatives & tech leaders for 2 days of keynotes, mixers & future-forward ideas. Get your tickets now: moonshot.techcabal.com
