Nigeria’s 36 states are projected to receive about N5.07 trillion in Value Added Tax (VAT) revenue in 2026 following the implementation of a new VAT sharing formula under the National Tax Acts.
Findings from the 2026–2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper approved by the Federal Executive Council show that, from January 2026, the Federal Government’s VAT share will drop from 15% to 10%, while states’ allocation will rise from 50% to 55%. Local governments will retain their 35% share.
Under the new structure, the Federal Government is expected to earn N922.5 billion in VAT revenue in 2026, down from N1.04 trillion in 2025, despite an increase in the overall VAT pool to N9.23 trillion. States, meanwhile, will see their collective share jump from N3.47 trillion in 2025 to N5.07 trillion, representing an additional N461.27 billion.
Local governments are projected to receive N3.23 trillion in 2026, up from N2.43 trillion the previous year.
Projections indicate continued growth in VAT collections, with the pool expected to reach N10.87 trillion in 2027 and N13.28 trillion in 2028, further strengthening state and local government revenues under the revised allocation system.
The shift reflects a broader restructuring of Nigeria’s public finance framework aimed at deepening fiscal federalism and boosting subnational government finances through consumption-based taxes.