This paper intends to evaluate the effect of tax evasion on the economic development of Yobe state, Nigeria. The importance of tax cannot be overemphasized. Taxes were used to administer the North in the pre-colonial era before oil production in 1958. The current loss of funding by the Nigerian government resulting from fall in oil revenue leads to this question, why is Yobe not generating enough funds through tax to develop the state? This study also intends to find out why is tax revenue that is so far collected are not used to develop the economy of the state in the way it is done in other states like Lagos and Kano? The data for the study is secondary and the research approach is quantitative in which Chi-square is employed for data analysis using Statistical Package for Social Sciences (SPSS), version 20. Based on the objective of the study, it is found out the tax evasion has the significant effect of the economic development of the state. It is recommended among others that the state government should improve the governance and to reduce the insurgency in the state.
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