LIRS vs. NRS: Do I Still Pay Lagos State Tax in 2026?
The rumors circulating on WhatsApp are dangerous.
Some business owners in Ikeja, Lekki, and Alaba believe that the new Nigeria Revenue Service (NRS) has swallowed the Lagos State Internal Revenue Service (LIRS). They think paying federal tax covers everything.
They are wrong. If you stop paying LIRS because you think the NRS reform cleared your debt, you are currently racking up penalties that could lead to the sealing of your business premises. In March 2026, the “Dual-Tax” reality in Nigeria is stricter than it has ever been.
The “New Law” Reality: Who Owns Which Pocket?
Under the Nigeria Tax Administration Act (NTAA) 2026, the government didn’t remove state taxes; they just changed how they are collected.
- The NRS (Federal): Collects for the Federation. This includes Corporate Income Tax (CIT), VAT, and the new 4% Development Levy for companies earning over ₦100M.
- The LIRS (State): Collects for Lagos State. This includes Personal Income Tax (PAYE), Withholding Tax (for individuals/rent), and the Lagos State Development Levy.
3 “Gotcha” Facts You Must Know for March 2026
1. The “Power of Substitution” is Real
On January 21, 2026, the LIRS issued a public notice. They are now using Section 60 of the NTAA 2025 to recover unpaid taxes directly from your bank account, your tenants, or even your customers.
- Investigative Tip: If you owe LIRS, they don’t need a court order anymore to tell your bank to move the money. They can “substitute” themselves as the owner of your funds.
2. Your TIN and NIN are now “Snitches”
In 2026, your NIN (National Identity Number) is your personal Tax ID.
When you pay your federal tax via the NRS portal, the system automatically shares that data with the LIRS. If you tell the NRS you made ₦50 million but tell the LIRS you only made ₦5 million, an automated “Red Flag” is triggered instantly.
3. The ₦800,000 “Tax-Free” Rule
The good news from the 2026 reform: If you earn ₦800,000 or less per year (approx. ₦66,000/month), you are 100% exempt from Personal Income Tax. This applies to both NRS and LIRS filings.
LIRS vs. NRS: The 2026 Comparison Table
| Tax Type | Who Do You Pay? | 2026 Deadline |
| Salary Tax (PAYE) | LIRS (State) | 10th of every month |
| Company Profit Tax (CIT) | NRS (Federal) | 6 months after year-end |
| 4% Development Levy | NRS (Federal) | Along with CIT |
| State Development Levy | LIRS (State) | March 31st (Annual) |
| VAT (7.5%) | NRS (Federal) | 21st of every month |
The Verdict: The “Double-Payment” Trap
You are not paying the same tax twice. You are paying two different levels of government.
- If you are an Employee: You pay LIRS (via PAYE). You likely have no business with the NRS unless you have a side hustle registered as a company.
- If you are a Business Owner: You pay the NRS on your Profits and you pay the LIRS on your Personal Income and Staff Salaries.
Journalist’s Warning: The LIRS has announced they are phasing out all manual submissions. If you are still trying to carry paper files to the Alausa office, you are wasting your time. Everything must go through the LIRS e-Tax portal.
