AUGUST 2025 STATE REVENUE REPORT
AUGUST STATE REVENUE EXCEEDS LAST AUGUST AND FORECAST
The Arkansas Department of Finance and Administration (DFA) announced today that August revenue collections exceeded forecasts across all three major categories: Individual Income Tax, Corporate Income Tax, and Sales and Use Tax. Collections also surpassed totals from August of last year.
August Net General Revenue totaled $52.6 million, 10.2% higher than last August. Collections were $46.6 million, or 8.9%, above the State’s forecast. As a result, the year-to-date surplus for the first two months of the fiscal year stands at $75.7 million.
Individual Income Tax Collections increased $25.2 million, or 10.6%, over last August, exceeding the State’s forecast by $28.7 million, or 12.2%. DFA had expected Income Tax Collections to fall below last year’s level. DFA attributed the increase in Individual Income Tax to “some shifting of quarterly estimated and extension tax payments from April and June because of the executive orders issued by Governor Sanders to provide relief to Arkansans affected by recent severe weather”. Individual Withholding Tax revenue from employee pay was $6.6 million, or 3.1%, above last August. Since withholding reflects payroll activity, this increase points more directly to positive economic performance than to filing-date shifts.
Sales and Use Tax collections rose $16 million, or $5.2%, over last August, coming in $14.8 million, or 4.8%, above forecast. DFA reported collections were up in “almost all major reporting sectors”. It is usually a positive economic sign to see Sales and Use Tax growth exceed price inflation. Price inflation provides an automatic increase in Sales and Use Tax since the tax is calculated on sales price. If national tariffs increase the price of goods subject to the Sales and Use Tax, that will provide an automatic increase in the tax that is unrelated to economic growth.
Corporate Income Tax collections in August totaled $5.5 million, up $1.5 million from last year and $2.1 million above forecast. August is typically a low month for corporate tax receipts.
Overall, August revenue results reflected several positive factors. The year-to-date surplus expanded significantly, with revenue growth recorded across all major categories and each exceeding forecast. Withholding Income Tax rose, signaling payroll growth, while Sales and Use Tax increased 5.2%, outpacing inflation earlier in the calendar year.
The question lingers as to whether Income Tax collections will continue to perform well as they cease to benefit from late payments from last year. There is also a question as to whether Sales and Use Tax collections reflect more transactions or price inflation driven by tariffs. The broader uncertainty is whether the national economy can maintain momentum amid unprecedented new dynamics. Fortunately, Arkansas is in better position than any time in its history to withstand potential challenges. Conservative revenue forecasting, disciplined budget practices, and the establishment of “rainy day” surplus funds have strengthened the State’s fiscal resilience. Hopefully, state leaders will continue those practices.
The August 2025 revenue report may be viewed here.