May tax revenue up 6.7% in Arkansas, ‘substantial surplus’ projected

Thanks to an almost 7% fiscal year-to-date gain in income tax revenue and an almost 4% gain in sales tax revenue, Arkansas’ total tax revenue in the first 11 months (July 2025-May 2026) is up more than 4%, with the estimated fiscal year surplus set at $585.8 million.

Total revenue in the first 11 months of the fiscal year is $7.761 billion, up 4.4%, or $323.6 million, compared with the same period in the previous fiscal year, according to Tuesday’s (June 2) report from the Arkansas Department of Finance and Administration (DFA).

Income tax revenue so far in the fiscal year totals $3.52 billion, up 6.8% compared with the previous fiscal year and 0.1% above the budget forecast that was recently revised. Sales tax revenue in the first 11 months of the fiscal year was $3.346 billion, up 3.9% compared with the same period in the previous fiscal year and 0.2% above the forecast.

Corporate income tax revenue through May was $424.4 million, down $22.9 million from the same period in the previous fiscal year and 0.2% above the forecast.

Total tax revenue in May was $624.6 million, up 6.7% compared with May 2025, and 1.6% above the budget forecast. The DFA said income withholding “collections increased $16.4 million, or 7.8 percent, in an extra Thursday payday month.”

“May net general revenue collections were ahead of our revised forecast by $10 million,” DFA Secretary Jim Hudson said in a statement. “As we move toward our closing of fiscal year 2026 on June 30, the department’s confidence remains high that we will finish the year with a substantial surplus.”

MAY COLLECTIONS
Following are May collections in the key categories.

Income tax
May 2026: $254.1 million
May 2025: $231.9 million
up 9.6%, 1.2% above budget forecast

Sales tax
May 2026: $315 million
May 2025: $301.5 million
up 4.5%, 2.2% above budget forecast

Corporate income tax
May 2026: $19.9 million
May 2025: $14 million
up $5.9 million, $900,000 above budget forecast

Arkansas ended the previous fiscal year (July 2024 – June 2025) with tax revenue of $8.359 billion, down 4% compared with the previous fiscal year. Tax revenue in the previous fiscal year also resulted in a $367.9 million surplus. The fiscal year ending in June 2024 posted a $698.4 million surplus, and the fiscal year ending June 2023 had a $1.161 billion tax revenue surplus.

OTHER REVENUE SOURCES
Tobacco
July 2025-May 2026: $163.4 million
July 2024-May 2025: $167.1 million

Insurance
July 2025-May 2026: $98.3 million
July 2024-May 2025: $97.9 million

Alcoholic beverages
July 2025-May 2026: $67.9 million
July 2024-May 2025: $69.4 million

Games of skill
July 2025-May 2026: $57.4 million
July 2024-May 2025: $54.7 million

Severance
July 2025-May 2026: $8.3 million
July 2024-May 2025: $9.7 million