Arkansas tax revenue down 4.3% in October, above budget forecast

Arkansas’ fiscal year-to-date (July 2024-October 2024) tax revenue is down 3.2% compared with the same period in the previous fiscal year, but is 1.1% above budget estimates. October collections were down 4.8% with the decline largely from lower income tax revenue.

Total revenue in the first four months of the fiscal year was $2.631 billion, down 3.2% compared with the same period in the previous fiscal year, but 1.1% above the budget forecast, the Arkansas Department of Finance and Administration (DFA) reported Monday (Nov. 4).

Income tax revenue in the first four months was $1.126 billion, down 5.2% compared with the same period in the previous fiscal year and 4% above the forecast. Sales tax revenue was $1.174 billion, up 1.5% compared with the same period in the previous fiscal year and 0.3% above the forecast. The corporate income tax was $151.8 million, $43.3 million below the same period in the previous fiscal year and 11% below the forecast.

“The decrease in year-to-date and monthly revenues compared to FY 2024 is largely due to the impact of individual and corporate income tax rate reductions passed in the First and Second Extraordinary Sessions of the 94th General Assembly,” the DFA noted in the October report.

OCTOBER REVENUE
Total revenue in October was $628.3 million, 4.3% below October 2023, and 1.5% above the budget estimate. October income tax revenue was $275.2 million, down 10.1% compared with October 2023 and 4.2% above the budget forecast.

October sales tax revenue was $298.1 million, up $11.7 million compared with October 2023, and 2.9% above the budget estimate. Corporate income tax revenue in October was $22.5 million, down $11.9 million compared with October 2023 and $10.4 million below the budget estimate.

“State revenue collection has remained consistent through the first four months of Fiscal Year 2025, with October $5.4 million above forecast. Payroll withholding and sales tax collections, both key indicators for DFA, were highlights in the October report and provide confidence in the state’s economic health as we enter the holidays,” DFA Secretary Jim Hudson said in a statement.

Arkansas officials estimate a fiscal year-end surplus of $280.5 million. The state ended the previous fiscal year with a $698.4 million surplus. The state ended the fiscal year before that with a $1.161 billion tax revenue surplus. The surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion.

OTHER REVENUE SOURCES
Tobacco
July 2024-October 2024: $64.8 million
July 2023-October 2023: $68 million

Insurance
July 2024-October 2024: $29.1 million
July 2023-October 2023: $25.8 million

Alcoholic beverages
July 2024-October 2024: $25.7 million
July 2023-October 2023: $26 million

Games of skill
July 2024-October 2024: $18.8 million
July 2023-October 2023: $18.1 million