Nigerian states received a total of ₦2.37 trillion in Value Added Tax (VAT) allocations during the first half of 2026, representing a 23.5 per cent increase compared to the corresponding period in 2025.

The increase reflects improved VAT collections and higher revenue distributed to sub-national governments through the Federation Account Allocation Committee (FAAC).

The higher allocations are expected to strengthen the fiscal capacity of state governments, enabling them to fund infrastructure projects, improve public services and meet other development priorities.

Analysts attribute the growth to stronger non-oil revenue performance, expanded tax collections and sustained economic activity across key sectors of the economy.

The development underscores the growing importance of VAT as a major source of revenue for states amid ongoing efforts by the Federal Government to enhance domestic revenue generation and reduce dependence on oil income.