MARCH 2026 STATE REVENUE REPORT
LEGISLATURE WILL BEGIN FISCAL SESSION WITH POSITIVE REVENUE REPORT
The Arkansas Legislature will begin the fiscal session this week with a positive revenue report. The Arkansas Department of Finance and Administration (DFA) reported today that year-to-date general revenue is now $220.1 million, or 4.6%, above last year and $61.5 million, or 1.2%, above forecast, which includes a projected surplus. Year-to-date revenue was bolstered by $45 million in windfall collections from lottery winners.
March total general revenue was $56.4 million, or 13.1%, more than last year and $54.1 million, or 12.5%, above forecast. This included a one-time collection of $4.6 million from a major lottery winner.
March income tax was $34 million, or 12.1%, greater than last March. This was $28.1 million, or 9.8%, above forecast. Withholding income tax from payroll, which is a major economic indicator, increased by 12.4%.
Sales and use tax was $29.1 million, or 10.6%, greater than last March. This was $35.3 million, or 13.1%, above forecast. DFA reported that in February and March of last year, a winter storm event caused some sales tax collections to be “shifted” from January to March. DFA stated that a better comparison is to evaluate February and March totals for both years. When considered together for the two-month period, the growth rate is 3.5%. This growth rate is still above the natural inflationary price growth for sales and use tax.
Corporate income tax collections were $24.7 million in March. This was an increase of $3.9 million over last March and $6 million below forecast.
As the Legislature begins meeting in the fiscal session, it will start on a positive note regarding revenue collections. Lawmakers can count on a surplus of collections over spending when this fiscal year ends in June. As they project collections for the next fiscal year, they should maintain a positive economic outlook, with income tax outpacing recent tax cuts and sales and use tax outpacing inflation. However, the $45 million windfall from taxes on large lottery payouts must be considered one-time revenue and discounted when forecasting next year’s collections.
Recent national and international news may dampen the economic projections used to set the forecast. History shows how even a single catastrophic event can cause the economy to decline. Hopefully, the Legislature will continue with conservative revenue forecasts, along with prudent spending and tax policies, to maintain fiscal stability.
The March 2026 revenue report may be viewed here.