The study investigates how tax compliance and yield in Nigeria are impacted by the informal sector, using an empirical approach. The research was prompted by an increase in government spending despite a decrease in revenue bases. Data were retrieved from the Central Bank of Nigeria (CBN) statistical bulletin and the National Bureau of Statistics (NBS) between the years 2011 and 2021 using a longitudinal research approach. The data was analyzed through descriptive statistics and regression analysis. Findings from the study suggest that personal income tax (PIT) has a limited effect on tax revenue in Nigeria, whereas direct assessment (DAS) has a notable positive influence on tax yield in the country. Road taxes in Nigeria do not significantly contribute to increasing tax revenue. Research indicates that imposing taxes directly on individuals in the informal economy has a more substantial positive impact on tax revenue. Conversely, taxes like personal income tax and road taxes imposed on the informal sector do not greatly affect tax collection in Nigeria. The study suggests that enhancing the government's strategies for assessing and collecting taxes from the informal sector could help boost tax revenues.