Arkansas year-to-date tax revenue down 1.3%, surplus rises to $216.4 million

State tax revenue totaled $4.093 billion in the first six months (July-December) of the fiscal year, down 1.3% compared with the same period in 2022, and up 6.7% against the budget forecast.

The state’s surplus – net available revenue above forecast – at the end of December was $216.4 million, according to a report posted Wednesday (Jan. 3) by the Arkansas Department of Finance and Administration (DFA).

Income tax revenue in the first six fiscal months was $1.731 billion, down 2.1% from the same period in 2022 and 7.2% above forecast. Sales tax revenue in the first six fiscal months was $1.743 billion, up 3.1% above the same period in 2022 and 2.7% above the forecast. The corporate income tax in the first six months was $337.9 million, down $69 million compared with the 2022 period and 35.8% million above the forecast.

“Net Available revenue results were above forecast in all major collection categories. Individual Income Tax gains against forecast were driven by non-Withholding Tax categories. Corporate Income Tax collections were above forecast with higher Estimated Payments. Sales Tax collections were above forecast and year ago levels with broad-based gains,” John Shelnutt, DFA administrator of economic and tax research, noted in the report.

DECEMBER COLLECTIONS
Total revenue in December was $768.6 million, down 0.4% compared with December 2022, and 10.6% above forecast. Individual income tax revenue in December was $294 million, up 1.8% compared with December 2022, and 10.9% above the budget forecast.

Sales and use tax revenue was $298.4 million, up 3% compared with December 2022 and 1.7% above the forecast.

“Major reporting sectors of Sales Tax displayed mostly higher growth over the prior year, reflecting continuing economic expansion in many sectors. Motor vehicle sales tax collections were down 12.6 percent from year ago,” Shelnutt noted.

Corporate income tax revenue was $130.7 million, down $20.8 million compared with December 2022, and $37.9 million above the forecast.

Arkansas ended the previous fiscal year (December 2022-June 2023) with a $1.161 billion tax revenue surplus driven in large part by a more than 8% growth in sales tax collections. Total tax revenue in the fiscal year (December 2022-December 2023) was $8.85 billion, up 0.9% compared with the previous fiscal year and 1.7% more than the budget forecast.

The fiscal year surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion. Total tax revenue in fiscal year 2022 (December 2022) was $8.773 billion, up 8% – or $651.2 million – and the budget surplus was $1.628 billion. The surplus in the fiscal year that ended June 2021 was $945.7 million.

OTHER TAX REVENUE
Tobacco
July 2023-December 2023: $101 million
July 2022-December 2022: $104.3 million

Insurance
July 2023-December 2023: $56.3 million
July 2022-December 2022: $53 million

Alcoholic beverages
July 2023-December 2023: $37.7 million
July 2022-December 2022: $37.1 million

Games of skill
July 2023-December 2023: $25.8 million
July 2022-December 2022: $23.2 million