OCTOBER 2026 STATE REVENUE REPORT
OCTOBER STATE REVENUE UP SUBSTANTIALLY AS LEGISLATURE STUDIES BUDGET
by inVeritas consultant Tim Leathers
After three months in the fiscal year Arkansas State Revenue has a total surplus of $153.7 million. The Arkansas Department of Finance and Administration (DFA) reported today that October Net General Revenue was above forecast by $49.2 million or 9.4 percent adding to this total. DFA stated that October Net General Revenue “outpaced forecast and year-ago collections in the largest categories of sales tax and individual and corporate income taxes”.
Individual Income Tax was $12.7 million or 4.5 percent higher than forecast. DFA explained that payments with returns were up $18.1 million compared to last year. This was because last year the October extended payment due date was delayed until December 3 because of the special filing extensions granted for storm disaster relief. Last year these payments would have been made in November and December. Withholding Income Tax from payrolls increased by $5.2 million after absorbing the income tax cut made this year which was retroactive to January 1.
Corporate Income Tax collections totaled $37.5 million which was up $13 million over last year and $11.7 million more than forecast. DFA stated that growth in estimated payments offset declines in return payments.
Sales and Use Tax collections had a strong month and were above forecast by $21.9 million or 7.1 percent. Total collections were $25.3 million or 8.3 percent higher than last year which outpaced inflation rates. DFA reported that, “Double-digit growth was recorded in several of the largest major reporting sectors including Utilities, Manufacturing, Construction and Accommodation and Food Services”. DFA reported that Retail Trade grew 8.3 percent and Motor Vehicle collections were down 3.2 percent.
The brightest point in the October report is the increase in Sales and Use Tax which was widespread across the economy and outpaced the built-in inflationary increase. Growth in Manufacturing and Construction and the significant 8.3 percent increase in Retail are especially encouraging economic indicators. The increase in Individual Income Tax is largely due to payment timing issues. However, Withholding held its own while absorbing tax cuts which is a positive economic note. The increase in Corporate Income Tax, which added to the surplus, is commonly understood to be volatile because variations in the tax often occur for corporate tax planning and filing strategies which may not be sustained in later months.
The State Legislature is currently in budget planning meetings for the Legislative session which begins in January. They will soon receive the Governor’s revenue forecast for the next two fiscal years which they will use to establish their spending and tax cut priorities. The October revenue numbers and the surplus after four months this fiscal year should contribute to optimism about future State finances.