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For these reasons, he was hated by many, especially the heavily-biased Theophanes, who is the main source of history for his reign. Byzantine historian J. B. Bury comments that Nikephoros' "fame has suffered, because he had neither a fair historian to do him justice, nor apologist to countervail the colored statements of his opponents."

Nikephoros consolidated power in the throne, instituted caesaropapism, and implemented strict fiscal laws.

Treadgold suggests that Nikephoros had witnessed "a good deal of financial mismanagement" before he seized power, but was unable to prevent it at that time. Indeed, one of his first acts as emperor was to seize control of a secret treasury reserve from Irene. Soon after, he took measures to increase the treasury, such as canceling tribute payments to the Abbasid Caliphate, an "exorbitant and humiliating payment", accepting the risk of war. Later, he ended the suspension of urban tariffs and estate taxes that Irene had implemented. Treadgold comments that the suspension of Irene's popular fiscal policies was bold, and risked reducing his own popularity, but that Nikephoros must have considered them too expensive to continue, and was aware that the capital was relatively undertaxed compared to the rest of the empire. He took similar efforts to tackle the issue of corruption, founding a new court where he heard complaints levied by the poor against the elites. While his supporters praised him for championing the poor, opponents declaimed him for his measures against the wealthy. Some of these opponents also alleged greed, but Treadgold comments that this likely referred to the effort Nikephoros put into collecting revenues, as the man himself was famously austere.

Staurakios was not given an official government position upon his father's accession to the throne, but, in the summer of 803, a general named Bardanes Tourkos revolted against Nikephoros, prompting a change of course. Originally strategos of the Thracesian Theme, Nikephoros had consolidated the five major themes of Asia Minor —Anatolic, Armeniac, Bucellarian, Opsikion, and Thracesian — under Bardanes' control as monostrategos of the combined area. When the Abbasid Caliphate began preparations for an attack that summer, Nikephoros was unable to take command due to an injury sustained in May, the role fell to Bardanes, who advanced his troops and began preparations. There, his troops grumbled over Nikephoros' financial policies, which included the reinstatement of the estate tax on soldiers; by comparison, Bardanes was considered to be very charitable in dividing war spoils, and thus they declared him emperor on July 19. Treadgold comments that although the rebellion theoretically commanded nearly half of the army, Bardanes seemed to lack the commitment to become emperor, and soon discussed terms with Nikephoros, who swore not to harm Bardanes or his soldiers if Bardanes would surrender and enter the monastery, which Bardanes did in early September. Although Nikephoros abided by his pledge not to harm the surrendered men, he did seize a significant amount of money and property from the leaders of the rebellion, and fined four of the themes a year of salary, and exiling some bishops to the remote island of Pantelleria, near Sicily. Nikephoros soon negotiated a moderate deal with the Abbasid Caliph Harun al-Rashid, including a small tribute payment.

Although his revolt was put down by early September, it convinced Nikephoros to consolidate his hold on the throne, and secure the succession, by declaring Staurakios co-emperor and heir, which he did on Christmas Day of 803. Staurakios was crowned by the Ecumenical Patriarch of Constantinople Tarasios in the Hagia Sophia. By making Staurakios emperor, Nikephoros removed any question of the imperial succession and increased his own legitimacy—although Staurakios, now somewhere between the ages of 11 and 13, was not yet old enough to actually exercise power. Theophanes states that Staurakios was "completely unfit in appearance, strength, and judgment for such an honor", but this is likely a reflection of Theophanes' own animosity toward Nikephoros and Staurakios. While opponents of Nikephoros decried Staurakios as sickly, Treadgold comments that any health issues he may have had did not prevent later participation in military campaigns; opponents also presented his obedience to his father as a failing.

Some sources hostile to the Macedonian dynasty, which was founded by Basil, including the tradition of the 10th-century Symeon Logothete, have suggested that future Emperor Leo VI ( 886–912), nominally the son of Basil and Eudokia, was actually the son of Michael and that she was Michael's mistress for much of his life, based on the time of his birth relative to her marriage to Basil. It is possible that this marriage was intended to be purely nominal, and that Michael offered his oldest sister, Thekla, to Basil as a mistress during this time, and some sources suggest that Eudokia herself remained as Michael's mistress. Symeon Logothete implies that not only Leo, but also Stephen I of Constantinople, was the son of Michael. George Hamartolos, a contemporary source, argues that the future Emperor Alexander ( 912–913), was Basil's only legitimate son. Mango suggests the intention of the marriage was to ensure Leo, whom Eudokia was then pregnant with, per some sources, would be born in the purple, officially as the child of a co-emperor and empress, rather than an emperor and a mistress. Garland and Tougher admit that pro-Macedonian sources would be unlikely to admit to such infidelity, as it would embarrass the dynasty. They doubt the entire narrative of Symeon Logothete, as he is generally hostile to the Macedonian dynasty, and question how, if Eudokia had been Michael's mistress since he was young, Leo could be their first child. Both Ostrogorsky and Adontz hold that Leo was the legitimate son of Basil and Eudokia, and dismiss the conspiracy. In her investigation of the rumors of infidelity, Karlin-Hayter notes that it is only contained within anti-Macedonian sources and that the rumor was contemporary to Michael's reign, and concludes the rumor was intended to humiliate Basil.

The Germanic magister militum (master of soldiers) Ricimer had deposed the Western Roman Emperor Majorian ((r. 457 – 461)) in 461, and thereafter installed a series of Western Roman emperors as puppets: Libius Severus ((r. 461 – 465)), installed after the deposition of Majorian; Anthemius ((r. 467 – 472)), after the death of Libius Severus, possibly poisoned by Ricimer himself; and Olybrius, enthroned in July 472, after Ricimer overthrew Anthemius.