New VAT Formula Boosts States’ Allocation to ₦2.37tn in H1 2026

State governments received ₦2.37tn from VAT allocations in the first half of 2026, a 23.5% rise over the ₦1.92tn shared during the same period in 2025. This increase followed the new VAT sharing formula, which redirected about ₦219.7bn from the Federal Government’s allocation to the states. A total of ₦4.39tn generated from VAT was distributed in the six-month period, up from ₦3.84tn in H1 2025. Local government councils received ₦1.51tn, while the Federal Government’s share stood at ₦431.43bn. Under the Nigeria Tax Act effective January 1, 2026, the Federal Government’s VAT share was reduced from 15% to 10%, and states’ share rose from 50% to 55%. The new law also changed state-level distribution to 50% equal allocation, 20% by population and 30% by consumption, replacing the old headquarters-based model.

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