Nigeria operates a federal system of government with 36 States and a Federal Capital Territory. The legal regime for her personal income tax is the Personal Income Tax Act, Chapter P8, Laws of the Federation of Nigeria, 2004 as Amended by Act No. 20 of 2011. The Act is an enactment by the National Assembly. However, revenue generated from the said Act accrues to, and is for the benefit and development of each of the 36 Constituent States. The Act, in accordance with its provisions is administered by the various Tax Administrative Bodies of each State of the Federation (States Internal Revenue Services). However, the proceeds from the Federal Capital Territory and certain Federal Agents accrue to the Federal Government coffer. Unfortunately, in implementing this Act, specifically, in Nigerian Universities, there exist wide gap of difference in the rate of tax payable by salary earners on the same cadre and consolidated scale, depending on whether they work in a Federal, State or Private Universities. This paper is an attempt to identify the reasons for this lop-sidedness, especially discriminatory interpretation and implementation, examine salient provisions in the Act which represents the correct interpretation of taxable income and assessment of tax payable by staff of State Universities, especially the Academic Staff, whose payment scales are used as case study. Doctrinal method of research was employed in carrying out this study. Primary source of legal research namely statutory laws especially the Personal Income Tax Act was examined. It was observed that the lopsided interpretation of the Personal Income Tax Act in the States University was as result of lopsided federalism and anxiety of States to generate the much needed income or revenue. The paper recommended that there is an urgent need to address the imbalance interpretation of tax statutes especially the Personal Income Tax Act in Nigerian Universities.