FEBRUARY 2026 STATE REVENUE REPORT

FEBRUARY STATE REVENUE COLLECTIONS EXCEED FORECAST AND LAST YEAR

The Arkansas Department of Finance and Administration (DFA) reported today that February 2026 Net General Revenue was $51.9 million, or 13.4%, greater than February 2025. Collections exceeded the forecast by $7.4 million, adding to the surplus for the fiscal year, which is projected to be $334.4 million at the end of the fiscal year on June 30. This revenue level was attained even after a payment of $10.6 million was deducted from Sales and Use Tax proceeds for the payment of economic development incentives.

Individual Income Tax collections were $7.1 million, or 2.6%, more than last February. The tax exceeded the forecast by $2.9 million, or 1%, after absorbing recent income tax cuts. DFA reported that payroll Withholding Tax increased at a healthy 3%, indicating a solid employee wage base. Individual Income Tax refunds were $26.5 million less than last year. If the refund decrease is a timing issue, this may negatively impact tax revenue later in the fiscal year.

Sales and Use Tax collections were $9.7 million, or 3.5%, lower than last February. Collections were $5.8 million, or 2.1%, below forecast. DFA attributed this shortfall to the $10.6 million economic development incentive payment mentioned previously. DFA also stated that, “The January winter storm likely disrupted sales in the last week of the month, which could have impacted the sales taxes due in the month of February.” No mention was made as to how much additional tax may have been collected from increased utility charges during the abnormally cold weather.

Corporate Income Tax collections were $8.0 million more than last February. This exceeded the forecast by $1.7 million. It should be noted that Corporate Income Tax refunds were $15.8 million less than last February. This seems to indicate that there was an anomaly of a large refund last year that DFA recognized would not recur this year and discounted in their forecast.

From an economic view, February was a good month, taking into consideration that a large economic incentive payment was deducted from the total. Presumably, DFA and the State Commerce Department have been continuing their return-on-investment analysis for incentives to ensure a return on these payments in the future. Individual and Corporate Income Tax refunds were substantially lower than last year, which boosted this month’s collections. The strongest economic indicator for February seems to be that payroll withholding was up 3%. Hopefully, the refunds are not just delayed until later in the fiscal year.

Some good tax collection news for the future is that DFA has just announced that Arkansas has another substantial lottery winner of $250.8 million. A lump-sum payment would be $118 million. State Individual Income Tax on that payment would be $4.6 million. We can look forward to seeing that windfall reflected in a future revenue report.

The February 2026 revenue report may be viewed here.