Arkansas ends fiscal year with $655 million revenue surplus

State officials announced Thursday (July 2) that Arkansas tax revenue ended the fiscal year (July 2025-June 2026) with a $655 million surplus. It is the fifth largest surplus in state history, and is up 78% compared with the $367.9 million surplus in the previous fiscal year.

Total revenue in the fiscal year was $8.686 billion, up 3.9%, or $327 million, compared with the same period in the previous fiscal year, according to Thursday’s report from the Arkansas Department of Finance and Administration (DFA). The total revenue was $48.2 million above the budget estimate.

“Today’s announcement shows that conservative leadership works, and I look forward to continuing our close collaboration with the legislature to slow the growth of government, expand our economy, and responsibly phase out our state income tax,” Gov. Sarah Sanders said in a statement.

Income tax revenue in the fiscal year totaled $3.859 billion, up 7.4% compared with the previous fiscal year and 0.3% above the budget forecast. Sales tax revenue in the fiscal year was $3.666 billion, up 3.9% compared with the same period in the previous fiscal year and 0.5% above the forecast.

Corporate income tax revenue in the fiscal year was $523.6 million, down $9.5 million from the same period in the previous fiscal year and 3.1% above the forecast.

The $655 million surplus was transferred to the general revenue allotment reserve fund. Money in the fund comes from unrestricted current and previous fiscal year surpluses and investment earnings. With the $655 million transfer, the fund now totals $1.221 billion. Spending from the fund requires the regular appropriation process by the Arkansas Legislature with approval by the governor, according to DFA Spokesman Scott Hardin.

Other state reserve funds are the catastrophic reserve fund ($1.814 billion) and the Arkansas reserve fund set aside ($1 billion).

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
Insurance
July 2025-June 2026: $216.7 million
July 2024-June 2025: $281.8 million

Tobacco
July 2025-June 2026: $179.9 million
July 2024-June 2025: $182.9 million

Alcoholic beverages
July 2025-June 2026: $76.6 million
July 2024-June 2025: $78.1 million

Games of skill
July 2025-June 2026: $64.4 million
July 2024-June 2025: $62 million

Severance
July 2025-June 2026: $10.6 million
July 2024-June 2025: $10.6 million