FEBRUARY 2025 STATE REVENUE REPORT
STATE REPORTS FEBRUARY REVENUE SURPLUS AND LOWER INCOME TAX REFUNDS
The Department of Finance and Administration (DFA) released the General Revenue Report for February, showing that Net Available General Revenue exceeded forecasts by $65.8 million, or 20.4%. This brought the year-to-date surplus to $105.1 million, or 2.5%. With four months remaining in the fiscal year, DFA continues to project a total surplus of $278 million.
DFA attributed the February surplus to be “primarily due to Individual Income Tax and Sales and Use Tax collections”. However, DFA paid out Individual Income Tax refunds, which were $46 million less than forecast. Lower refunds accounted for 70% of the $65.8 million February surplus.
Sales and Use Tax collections were $26.1 million, or 10.5%, above forecast and $15.5 million, or 6%, higher than last year. Sales and Use Tax Collections returned to growth after being below prior year collections and forecast in January. DFA did not attribute the Sales and Use Tax growth to any specific business sector or economic factors.
Individual Income Tax Collections continued to grow in February after absorbing tax cuts. Collections were $24.6 million, or 10%, greater than last February. Collections were $9.7 million, or 3.7%, above forecast. DFA attributed the increase to “additional paydays on withholding collections” rather than economic performance.
February saw positive indicators, with both Individual Income Tax and Sales and Use Tax collections surpassing last February's figures and exceeding the monthly forecast. The February Revenue Report did not include any explanation other than payroll timing. The report includes a substantial surplus of $65.8 million dollars, 70% of which is due to $46 million less in Income Tax refunds paid to taxpayers.
Had refunds been in line with the forecast, the February surplus would have been only $19.8 million. Refund monthly totals depend on three factors: 1) the number of refund returns filed, 2) the dollar amount claimed on those returns, and 3) the number of returns processed and paid by DFA. DFA controls the processing and payment of refund returns. Monthly and year-to-date refund statistics have traditionally been maintained to monitor performance. The decrease in refunds this month seem to warrant examining those statistics.
The February 2025 revenue report may be viewed and downloaded here.