Arkansas tax revenue up 1.7%, surplus estimate jumps to $334.4 million

A revised revenue forecast has Arkansas’ projected fiscal year surplus at $334.4 million, more than double the previous estimate of $160.3 million. Tax revenue in the first eight months of the fiscal year (July 2025-February 2026) is up almost 2%.

Tax revenue at the end of February was $5.362 billion, up 1.7% compared with the same eight-month period in the previous fiscal year, and 1.9% above the budget forecast that was revised Jan. 30, the Arkansas Department of Finance and Administration (DFA) reported Tuesday (March 3).

Income tax revenue so far in the fiscal year totals $2.353 billion, up 2.9% compared with the previous fiscal year and 0.1% above the budget forecast. Sales tax revenue in the first eight months of the fiscal year was $2.406 billion, up 2.8% compared with the same period in the previous fiscal year and 0.2% above the forecast.

Corporate income tax revenue through February was $252 million, down $42.6 million from the same period in the previous fiscal year and $1.7 million above the forecast.

“February was another solid month for Arkansas’s General Revenue collection, with results in line with DFA’s revised forecast,” said DFA Secretary Jim Hudson. “We are entering the busiest time of tax filing season, with more than 456,000 individual tax returns processed to date by DFA. Our outlook remains optimistic with four months remaining in FY26.”

FEBRUARY COLLECTIONS
February revenue totaled $585.7 million, up 1.4% compared with February 2025 and 0.3% above the budget forecast. Following are February collections in the key categories.

“This month’s collections were impacted $10.6 million by an economic development incentive refund for purchases made in prior years,” the DFA noted in the report. “The January winter storm likely disrupted sales in the last week of that month which could have impacted the sales taxes due in the month of February.”

Confidentiality agreements prevent the disclosure of a company receiving a sales tax refund through an economic development incentive program, according to the DFA.

Income tax
February 2026: $277.5 million
February 2025: $270.4 million
up 2.6%, 1% above budget forecast

Sales tax
February 2026: $263.9 million
February 2025: $273.6 million
down 3.5%, 2.1% below budget forecast

Corporate income tax
February 2026: $10.2 million
February 2025: $2.1 million
up $8.1 million, $1.7 million 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-February 2026: $117.9 million
July 2024-February 2025: $123.3 million

Insurance
July 2025-February 2026: $76.4 million
July 2024-February 2025: $67.4 million

Alcoholic beverages
July 2025-February 2026: $47.9 million
July 2024-February 2025: $49.5 million

Games of skill
July 2025-February 2026: $39.6 million
July 2024-February 2025: $37.6 million

Severance
July 2025-February 2026: $5.9 million
July 2024-February 2025: $7.7 million