Arkansas’ January tax revenue down 5.9%, above the forecast by 3%

by Talk Business & Politics staff ([email protected]) 508 views 

Arkansas’ tax revenue through January is down 3.4%, with January revenue down almost 6%. The declines are not a surprise to state officials and are primarily the result of income and corporate tax cuts signed into law in June 2024.

Legislators in a 2024 special session voted to reduce the top personal income tax rate from 4.4% to 3.9% and the top corporate income tax rate from 4.8% to 4.3%.

Arkansas’ fiscal year-to-date (July 2024-January 2025) tax revenue is $4.696 billion, down 3.4% compared with the same period in the previous fiscal year, according to Tuesday’s (Feb. 4) report from the Arkansas Department of Finance and Administration (DFA). The revenue is 1% above the budget forecast.

Income tax revenue in the first seven months was $2.017 billion, down 4.4% compared with the same period in the previous fiscal year and 2.7% above the forecast. Sales tax revenue was $2.067 billion, up 1.1% compared with the same period in the previous fiscal year and 0.1% below the forecast. The corporate income tax was $292.5 million, $99.8 million below the same period in the previous fiscal year and 7.1% below the forecast.

“The new year began with encouraging results, with January’s individual and corporate income tax revenue collections coming in above forecast,” DFA Secretary Jim Hudson said in a statement. “Year-to-date net general revenues are $44 million above forecast, and we remain positive concerning our revenue forecast for the year.”

Total revenue in January was $722.7 million, 5.9% below January 2024, and 2.5% above the budget estimate. January income tax revenue was $349.9 million, down 7.9% compared with January 2024 and 4.1% above the budget forecast.

January sales tax revenue was $298.3 million, down 1.3% compared with January 2024, and 3% below the budget estimate. Corporate income tax revenue in January was $41.9 million, down $12.4 million compared with January 2024 and $11.7 million above the budget estimate.

The estimated fiscal year surplus remains at $278.6 million, according to the DFA. 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 near or more than $1 billion.

OTHER REVENUE SOURCES
Tobacco
July 2024-January 2025: $109.4 million
July 2023-January 2024: $115.6 million

Insurance
July 2024-January 2025: $62.9 million
July 2023-January 2024: $56.9 million

Alcoholic beverages
July 2024-January 2025: $44.4 million
July 2023-January 2024: $44.1 million

Games of skill
July 2024-January 2025: $32.4 million
July 2023-January 2024: $30.8 million