A nation economic growth is reliant on a steady means and bases of income, while taxation is the basis upon which the nation’s economic structure is erected. However, inadequate monthly payment of funds from the federal government to the state government account necessitates reason to explore other sources of income. The study therefore explores the key factors that influence personal income tax.

The study employs both longitudinal survey design to track variables over time and Ex-post facto research design, primary data were collected via a structured questionnaire while Secondary data were extracted from National Bureau of Statistics and Osun Internal Revenue Service from 2014 to 2023 – ten (10) years. Both descriptive and inferential statistics are used, descriptive statistics inform of factor analysis was utilized to determine the relevant factors of Personal Income Tax, whereas inferential statistics through correlation analysis helps assess relationships between Personal Income Tax (PIT) and Internally Generated Revenue (IGR). Additionally, Ordinary Least Square regression model was applied to evaluate the impact of PIT on IGR. All test were conducted at 5% level of significant.

Factors such as tax rate (0.761), tax policies and laws (0.757), penalty rate (0.729), employment status (0.742) income level of taxpayers (0.695), The attitude of taxpayers (0.665), poor tax collection methods (0.684), lack of accountability and transparency (0.565) and Government spending habits (0.640) display strong communalities. Public confidence in government (0.546), tax audit frequency (0.547) and tax knowledge and awareness (0.590) showed a moderate communality. Conversely, tax enforcement (0.321) exhibits a comparatively low communality. The existence of positively strong relationship (0.9375) was discovered betwixt IGR and Pay-As-You-Earn (PAYE), fines and fees exhibit a high positive correlation (0.9178) with IGR, Earnings and sales also show a strong positive relationship (0.8751) with IGR, rent from government property, while positively correlated with IGR (0.3311), has a relatively weaker association compared to other revenue sources. The strong correlation between PAYE and fines and fees is (0.8522). Similarly, earnings and sales correlate strongly with PAYE (0.7624) and fines and fees (0.7024), direct assessment tax on the other hand was negatively correlated with IGR (-0.1459), direct assessment tax and earnings and sales (-0.4262) and rent from government property (-0.5660). However, the following variables were significant; PAYE (p-value = 0.0003), Fine and Fees (p-value = 0.0008), and Rent on Government property (p-value = 0.0020) except Earnings and Sales (p-value = 0.0578) and direct assessment (p-value = 0.0641) that were not significant.

The study concluded the existence of a positively significant relationship and effect betwixt personal income tax and Osun state IGR. It was therefore recommended that strengthening PAYE tax enforcement, improving tax administration efficiency as well as enhancing compliance in direct assessment tax are crucial for ensuring sustainable fiscal growth in Osun State.