Most Nigerians pay personal income tax to their state of residence. A small group does not, and the exceptions are worth knowing if you or someone you pay salaries to falls into one of them.
The rule this post is the exception to
The default is straightforward: you pay to the tax authority of the state where the employee lives. Our guide to the state-of-residence rule covers it in full. This post covers who sits outside that default.
The Nigeria Tax Administration Act 2025, in force from 1 Jan 2026, carves out four groups. Each is taxed federally, not by any state.
Armed forces and police, outside the civilian ranks
Serving members of the armed forces are taxed federally, whatever state they are posted to or living in. The same applies to serving members of the police, again excluding civilian staff.
The likely reason is how often postings move. A soldier stationed in Borno one year and Lagos the next would otherwise force a state-by-state reassessment every time they moved barracks. Federal taxation avoids that churn.
Civilian employees who work at a barracks or a police formation are not covered by this exception. Someone employed as an administrator or driver at a police command, for instance, is still taxed by their own state of residence in the ordinary way.
Foreign Service officers
Foreign Service officers are also taxed federally, not by a state. The Act names the whole category, so this guide does not narrow it to any particular posting.
If you are unsure whether your role counts as Foreign Service, ask your employer or an accountant before assuming either way. Getting it wrong sends your tax to the wrong authority.
Non-residents earning Nigerian income
Someone who is not resident in Nigeria at all, but who still earns Nigerian-source income, is taxed federally rather than by a state. A state authority is built around people who live in that state, so income earned by someone with no state of residence in Nigeria falls to the federal authority instead.
This is a narrower group than "Nigerians living abroad" as a whole. Many Nigerians abroad keep strong ties to a specific state and may still have state obligations depending on their circumstances; an accountant can confirm which side of the line a particular case falls on.
Why this matters if your status changes
None of these four categories are permanent labels. A soldier retires. A Foreign Service officer leaves the service. Someone living abroad moves home.
When a person leaves a category, the ordinary state-of-residence rule applies to them instead, so PAYE or personal income tax follows wherever they now live. This guide does not confirm the exact date that change takes effect, so ask payroll or an accountant.
Payroll and HR teams at institutions with mixed civilian and uniformed staff should check which category each employee actually falls into, rather than assuming everyone on the same site is taxed the same way. Getting it wrong in either direction creates a remittance to the wrong authority that then has to be untangled later.
Where this fits with the rest of the series
For the ordinary rule that applies to everyone else, see which state you pay personal income tax to. For the annual filing duty that sits alongside whichever authority applies to you, see filing your individual annual tax return. More on personal income tax and PAYE is in our PAYE and state tax hub.