Personal income tax in Nigeria is a state matter, not a federal one, for almost everyone. The rule that decides which state gets yours is simple to state and easy to apply.
The rule in one line
You pay personal income tax to the tax authority of the state where the employee lives. Not the state your office is in. Not the state your employer's head office is registered in. The state you actually live in.
For an employee, this decides which state your employer remits your PAYE to every month. For a self-employed person, it decides which state assesses you and collects your annual tax.
A real example: working in Abuja, living next door
The tax authority for the Federal Capital Territory gives a clean illustration of the rule. Someone who works in Abuja but lives in Suleja or Mararaba is not an FCT-IRS taxpayer at all. Suleja sits in Niger State and Mararaba sits in Nasarawa State, so that person's tax goes to the Niger State or Nasarawa State tax authority instead, even though their job and their desk are in Abuja every working day.
The same logic applies anywhere in Nigeria. Live in Ogun and commute into Lagos, and what counts is where you live, not where you work each morning.
Why your employer's address is not what decides it
A company can be registered in one state and have staff living in a dozen others. Payroll teams do not remit everyone's PAYE to one single state. They work out each employee's state of residence individually and split the monthly remittance accordingly.
This is also why a job offer letter or an employment contract does not decide which state your tax goes to. It depends on you, not on the employer, and it can change without your job changing at all.
What changes the moment you move
Move house to a different state and the rule points to your new address. Your employer's payroll team needs your new address to redirect PAYE correctly. This guide does not confirm the exact date a move takes effect, so ask payroll which state applies to your pay and an accountant about your annual return.
Our checklist for moving states mid-year covers this in more detail, including what to tell payroll and what to ask about your return.
A small number of exceptions
The residence rule is not universal. Serving members of the armed forces and the police, other than civilian staff, along with Foreign Service officers and people who are not resident in Nigeria at all, are taxed by the federal authority instead of a state, regardless of where they are stationed. See who pays federal, not state, tax if one of those groups applies to you.
Common mistakes
- Assuming your office location decides it. It does not. Only your residence does.
- Not updating payroll after a house move. The state changes with your address, and payroll cannot guess a new one.
- Confusing this with business tax. A business's VAT goes to the Nigeria Revenue Service (NRS), formerly FIRS, a completely separate system from an individual's personal income tax.
- Assuming every state's rules are identical. They share The Nigeria Tax Administration Act 2025 as their legal foundation, but each state runs its own portal and registration process.
Where to check next
If you know your state, look up its own portal and registration steps in our PAYE and state tax hub, which links each state guide we have published. If you are not sure your employer has this right, ask payroll directly and compare it against your own residential address.