The Arkansas Department of Finance and Administration released its first monthly revenue report of the new fiscal year Friday, and the impact of multiple rounds of cuts to the state’s top income tax rates is apparent: net available general revenue is down by $25.6 million compared to this time last year, a 4.6% drop.
The state’s fiscal year runs from July to June; fiscal year 2025 began on July 1.
Net available general revenue for July was $527.7 million. That’s still $2.8 million above the state’s forecast for the month, the report said, or about half a percentage point. The state’s forecasts take into account the predicted effect of tax cuts, so that’s no surprise. And as always, bear in mind that Arkansas’s projections are notorious for producing lowball estimates.
The Arkansas Legislature and Gov. Sarah Sanders cut income taxes during last spring’s regular legislative session and again during a special session last fall — and then a third time in another special session in June. The most recent legislation lowered the top corporate rate from 4.8% to 4.3% and the top individual rate from 4.4% to 3.9%, retroactive to the beginning of 2024.
The July report said individual income tax collections were down by almost $29 million (a 10.4% drop compared to last year). Corporate income tax collections were down by $8.3 million. The drop in income tax collections was partially offset by a rise in sales tax collections — up $7.8 million over this time last year — and lower-than-expected individual income tax refunds.
Here’s the full report from DFA: