State governments received N2.37 trillion from Value Added Tax (VAT) revenue in the first half of 2026, an increase of N451.25 billion or 23.48 per cent compared to the N1.92 trillion received during the same period in 2025, according to an analysis of Federation Account Allocation Committee (FAAC) reports by The PUNCH.
The analysis, based on data from the National Bureau of Statistics (NBS) and the Office of the Accountant-General of the Federation, covered VAT generated between January and June 2026, with the proceeds shared at FAAC meetings held from February to July.
Overall, N4.31 trillion in distributable VAT revenue was shared among the Federal Government, state governments and local government councils during the six-month period. This represents an increase of N471.07 billion, or 12.26 per cent, over the N3.84 trillion distributed in the corresponding period of 2025.
The increase in states’ earnings was driven by higher VAT collections and the implementation of a new VAT revenue-sharing formula that took effect on January 1, 2026, following the signing of new tax laws in June 2025.
Under the previous arrangement, VAT revenue was shared 15 per cent to the Federal Government, 50 per cent to states, and 35 per cent to local governments.
The new formula reduced the Federal Government’s share to 10 per cent, increased the states’ allocation to 55 per cent, while the 35 per cent share for local governments remained unchanged.
Based on the N4.31 trillion VAT pool distributed during the first half of the year, the revised formula shifted approximately N215.72 billion from the Federal Government to state governments.
Had the former sharing formula remained in place, the Federal Government would have received about N647.15 billion, but under the new arrangement, its share stood at approximately N431.43 billion. States, meanwhile, received N2.37 trillion instead of the N2.16 trillion they would have received under the old formula.
Local governments received about N1.51 trillion during the period, with their allocation unchanged.
The highest monthly allocation to states came from January 2026 VAT revenue, distributed in February, when they received N551.77 billion. This was 53.53 per cent higher than the N359.39 billion allocated during the same period in 2025.
The allocation dropped to N340.52 billion from February 2026 VAT revenue, before declining further to N283.47 billion from March 2026 collections distributed at the April FAAC meeting.
