AUGUST 2026 STATE REVENUE REPORT
AUGUST STATE REVENUE ON TRACK WITH FORECAST
The Arkansas Department of Finance and Administration (DFA) announced today that August State Net General Revenue was above forecast by $4.5 million or 0.8 percent. Individual Income Tax and Sales and Use Tax were above forecast, and Corporate Income Tax was below forecast. After two months into the fiscal year Net General Revenue is above forecast creating a surplus of $30.8 million.
August Individual Income Tax collections were $5.4 million or 2.1% greater than last August. This was $1.6 million or 0.6% greater than last year. DFA attributed part of this increase to one extra Friday payday which shifted taxable income into August. Individual Withholding Tax revenue increased by $26.5 million or 11.8 percent. In comparing Individual Income Tax revenue with last August DFA noted that Return and Estimated payments were lower because of “disaster executive order in April 2025 which shifted some collections April to August 2025”. DFA stated August payments returned to normal collection patterns.
Sales and Use Tax collections were $4.1 million or 1.3% greater than last August. This was $0.9 million or 0.3 percent higher than forecast. DFA stated that there were mixed results in Sales and Use Tax collections by category. They stated that collections were down in the categories of Construction, Wholesale Trade and Professional Services. They pointed to high growth in Utility Sales Tax. Only moderate growth was noted in Retail Trade and Accommodations (hotel) and Food (restaurant) sales.
August is a normal low payment month for Corporate Income Tax. August total collections were $5.0. This was a decrease of $0.5 million and $0.6 million less than forecast.
It is always good for monthly revenue to be above forecast. However, collections performance must always be compared to current economic conditions to determine viability. Recent economic wage reports have stated that Arkansas wages are growing more than 4.5 percent. Even after discounting both positive and negative reporting variations in August, the 2.1 percent growth rate does not demonstrate significant economic growth.
Sales and Use Tax increases automatically with price inflation. Compared to recent price inflation the 1.3% growth rate looks weak. This is especially true when the major growth area indicated is from utility charges which have been increased from price inflation and demand from extremely warm weather. Only “moderate growth” is reported from retail sales and restaurant food sales which have been impacted by high inflation. In the current economic inflation only moderate growth in Construction, Wholesale Trade and Professional Services categories is troubling.
Fortunately, the State continues to benefit from conservative revenue forecasting and budgeting. Enough revenue continues to be collected to pay the bills and put surplus in the bank. Perhaps the percentage of growth will increase for Individual Income Tax and Sales and Use Tax for the remainder of fiscal year demonstrating a stronger economy. That is too early to predict. However, we should all probably look forward to higher utility bills with more tax.
The August 2026 revenue report may be viewed here.