Arkansas tax revenue down more than 7% in September report

State tax revenue was down more than 7% in September and is up less than 1% in the first three fiscal months (July-September 2025) of the year compared with the same period in 2024, the Arkansas Department of Finance and Administration (DFA) reported Thursday (Oct. 2).

The projected tax surplus through September is $74 million, according to the DFA.

Tax revenue in the first three months is $2.016 billion, up 0.6% compared with the same period in 2024 and 4.1% above the budget forecast.

Income tax revenue in the first three months of the fiscal year totaled $854.6 million, up 0.4% compared with the same period in 2024 and 8.6% above the forecast. Sales tax revenue in the first three months totaled $908.9 million, up 3.7% compared with the same period in the prior year and 2.7% above the forecast.

The corporate income tax was $106.2 million in the first three months of the fiscal year, down $23.1 million compared with the same period in 2024 and $12 million below the forecast.

“September gross revenue collections met forecast, but net revenues were slightly under forecast, less than half a percentage point,” DFA Secretary Jim Hudson said in a statement. “Sales tax collection remained strong, surpassing forecast and increasing year to year by 2.6%. With one quarter of the fiscal year now complete, total revenues are $74 million ahead of forecast, indicating the state’s revenue picture remains stable.”

September revenue totaled $726.6 million, down 7.2% compared with September 2024 and 0.1% above the budget forecast. September income tax revenue was $331.7 million, down 9.4% compared with September 2024 and 5.1% above the budget forecast. Sales tax revenue in September was $286.7 million, up 2.6% compared with September 2024 and 2.4% above the forecast. The corporate income tax in September was $76.4 million, down $25.9 million compared with September 2024 and $20 million below the forecast.

The DFA provided a caveat about the September sales tax revenue.

“September 2024 and September 2025 collections were impacted by large economic development investment incentive refunds for purchases made in prior years,” according to the DFA report. “Without the refunds, sales and use tax collections grew 4.6% over last year.”

Arkansas ended the previous fiscal year (September 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-September 2025: $45.7 million
July-September 2024: $47.8 million

Insurance
July-September 2025: $31.3 million
July-September 2024: $28.9 million

Alcoholic beverages
July-September 2025: $19.6 million
July-September 2024: $19.8 million

Games of skill
July-September 2025: $15.5 million
July-September 2024: $14.7 million

Severance
July-September 2025: $2.7 million
July-September 2024: $3.4 million