On Wednesday, November 20th, legislative and executive branch economists released the revenue update for November, detailing collections for the first four months of Fiscal Year (FY) 2025. The Revenue Summary (TC-23) published by the Tax Commission tallies funds collected by the state, while the impact of those collections is interpreted in the Revenue Snapshot co-produced by the Legislative Fiscal Analyst and Governor’s Office of Planning and Budget.
While revenue collections to the coveted General and Income Tax Funds grew robustly in the first quarter of the fiscal year, October revealed a marked change. State sales tax, which drives the General Fund, grew at 1.3% year-over-year, short of the projected growth rate of 1.5%. In contrast to the projected growth rate of 2.0%, income tax collections declined by 1.6% when compared to this point last year. Several factors are cited for this dip in income tax, including multiple corporations filing for large refunds in the month of October (the six-month deadline for tax year 2023 extensions). Additionally, and perhaps more interestingly, the usually reliable income tax withholding collections were static (withholding being considered a pulse on wages in the labor market). Lastly, the national election may influence the timing of when businesses and individuals choose to claim income, as taxpayers anticipate future tax policy changes.
While there are still several months left in the fiscal year during which collections could rebound, the impending budget season means that trends will be monitored closely. As always, state economists will update their FY 2025 forecast and release a new FY 2026 projection with the Governor’s budget recommendations in early December.
The reports referenced in this post are available at the following links:
November Revenue Snapshot (FY 25)
Tax Commission Revenue Summary (Period 4, FY 2025)
Revenue Publications Archive