Arkansas tax revenue ahead of forecast through March, surplus at $278.6 million
by April 2, 2025 10:38 am 669 views
Lower Arkansas income and corporate tax rates approved in 2024 are the primary reason for a tax revenue decline of more than 3% in the first nine months (July 2024-March 2025) of the fiscal year, but revenue is slightly ahead of the forecast.
Arkansas’ fiscal year-to-date tax revenue is $5.911 billion, down 3.1% compared with the same period in the previous fiscal year, according to Wednesday’s (April 2) report from the Arkansas Department of Finance and Administration (DFA). The revenue is 0.8% above the budget forecast.
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%.
Income tax revenue in the first nine months was $2.569 billion, down 3.4% compared with the same period in the previous fiscal year and 2.6% above the forecast. Sales tax revenue was $2.616 billion, up 0.7% compared with the same period in the previous fiscal year, but 0.1% below the forecast. Corporate income tax revenue was $321.5 million, $121.3 million below the same period in the previous fiscal year and 5% below the forecast.
“Results below forecast are primarily due to weaker sales tax collections than projected. All other revenues combined to be within $1 million of forecast,” the DFA noted in the report.
DFA Secretary Jim Hudson said overall revenue continues to be more than the forecast.
“With three quarters of fiscal year 2025 completed, our year-to-date net revenues are $131.7 million ahead of forecast. This is in addition to the already forecasted budget surplus of $278.6 million. The department will continue to monitor revenue trends and economic conditions in advance of the next revenue forecast to be released in May,” Hudson said following Wednesday’s report.
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.
MARCH REVENUE
Total revenue in March was $638.3 million, 7.3% below March 2024, and 4.1% below the budget estimate. March income tax revenue was $281.9 million, down 6.9% compared with March 2024 and 0.9% above the budget forecast.
March sales tax revenue was $275.5 million, down 6.7% compared with March 2024, and 8.8% below the budget estimate.
“(Sales tax) Declines were reported in most major categories. However, motor vehicle sales tax collections were up 27.7 percent. Sales tax collection results include a one-time refund of $2.5 million for a tax period in a previous year,” the DFA noted.
Corporate income tax revenue in March was $26.9 million, down $9.1 million compared with March 2024 and $1.7 million below the budget estimate.
OTHER REVENUE SOURCES
Tobacco
July 2024-March 2025: $137 million
July 2023-March 2024: $145.6 million
Insurance
July 2024-March 2025: $93.7 million
July 2023-March 2024: $86.3 million
Alcoholic beverages
July 2024-March 2025: $55.2 million
July 2023-March 2024: $55.2 million
Games of skill
July 2024-March 2025: $42.9 million
July 2023-March 2024: $40.7 million
Severance
July 2024-March 2025: $8.1 million
July 2023-March 2024: $9.3 million