Arkansas tax revenue down 15.5% in April, down 9.2% from budget forecast

An income tax extension for those in storm-damaged areas and income tax payments made prior to April were primarily responsible for a 15.5% decline in Arkansas tax revenue in April. The April revenue was 9.2% below the budget forecast.

Arkansas’ fiscal year-to-date (July 2024-April 2025) tax revenue is $6.852 billion, down 5% compared with the same period in the previous fiscal year, according to Friday’s (May 2) report from the Arkansas Department of Finance and Administration (DFA). The revenue is 0.7% below the budget forecast.

Income tax revenue in the first 10 months was $3.063 billion, down 6.2% compared with the same period in the previous fiscal year and 0.2% above the forecast. Sales tax revenue was $2.919 billion, up 0.7% compared with the same period in the previous fiscal year, but 0.2% below the forecast. Corporate income tax revenue was $433.3 million, $183 million below the same period in the previous fiscal year and 10.3% below the forecast.

The decline in individual and corporate income tax revenue is also attributable to a lower income tax rate. 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%.

“Looking at the overall results year to date, the state of Arkansas is still $52 million ahead of forecast (on top of the projected surplus of $279 million),” DFA Secretary Jim Hudson noted in a statement. “We believe our year-to-date results provide ample margin to mitigate any revenue that may be shifted from the last two months of FY 2025 into FY 2026 due to the extensions.

APRIL REVENUE
Total revenue in April was $940.6 million, 15.5% below April 2024, and 9.2% below the budget estimate. April income tax revenue was $494.2 million, down 18.5% compared with April 2024 and 10.4% below the budget forecast.

April sales tax revenue was $302.9 million, up 0.7% compared with April 2024, and 1.5% below the budget estimate. Corporate income tax revenue in April was $111.7 million, down $61.7 million compared with April 2024 and $38.2 million below the budget estimate.

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-April 2025: $150.8 million
July 2023-April 2024: $160.9 million

Insurance
July 2024-April 2025: $94.3 million
July 2023-April 2024: $86.6 million

Alcoholic beverages
July 2024-April 2025: $61.6 million
July 2023-April 2024: $61.6 million

Games of skill
July 2024-April 2025: $48.8 million
July 2023-April 2024: $46.9 million

Severance
July 2024-April 2025: $9.3 million
July 2023-April 2024: $10.3 million