SEPTEMBER 2026 STATE REVENUE REPORT
STATE CORPORATE INCOME TAX PAYMENTS SKEW LARGE SEPTEMBER SURPLUS
The Arkansas Department of Finance and Administration (DFA) reported today that September Net General Revenue exceeded their forecast by a substantial $73.7 million or 11.3 percent. Tax collections were above forecast in all major categories, but Corporate Income Tax accounted for $50 million the overage. September’s surplus brings the total year-to-date surplus to $108 million or 5.3 percent.
Individual Income Tax collections increased $5.1 million or 1.5 percent over last September. This was $8.6 million or 2.6 percent more than forecast. DFA forecasted a slight decrease in Individual Income Tax for September. This was likely due to the two factors that DFA mentioned. There was one less payday this September than last year and tax cuts were implemented that were not enacted for last September. These two factors resulted in an Individual Withholding Tax decrease of $21.5 million or 9.1 percent.
Sales and Use Tax Collections were $35.1 million or 12.3% greater than last year and $13.3 million or 4.3% above forecast, exceeding reported consumer inflation rates. DFA stated that, “reporting sectors were mostly positive compared to year ago with strong growth in Utilities and Wholesale Trade and moderate growth in Retail Trade and Accommodations and Food Services.” The growth in Utility Sales Tax would have been expected with inflated utility bills due to extraordinarily hot weather and high fuel prices.
September Corporate Income Tax Collections totaled $126.4 million. This was $50 million or 65.4 percent above forecast. DFA stated that, “Strong growth was recorded in Estimated Payments and accounted for nearly all corporate income tax growth”. It is well known that Corporate Income Tax is highly volatile and difficult to predict. One big reason is that Corporations report and pay taxes on a fiscal year basis that may vary from the calendar year. In addition, Corporations often prepay state tax or overpay estimates to get a federal income tax deduction and then pay less state tax later in the state fiscal year.
Only a closer examination to determine which corporations paid unusually high estimate amounts might discover an indication of whether this money is extra collections or will offset future collections. In previous times an analysis of who paid extraordinary amounts was done. In some cases, select corporations were contacted directly to determine the nature of the large payments. Of course, this could only be done using taxpayer information which would be confidential to the public. However, since a few corporations pay the majority of the Corporate Income Tax this is possible to check. At one time about 18 percent of corporations paid 80 percent of the tax.
At first observation September appears to be a windfall month for Revenue. The Corporate estimate payment overage must be discounted until later in the fiscal year. The Sales Tax Increase is fueled by hot weather and high inflation which levy an automatic tax increase on taxpayers. The Individual Income Tax is only slightly increased after absorbing income tax cuts. The State is faring well with surpluses at this point in the fiscal year. However, there in nothing that currently points to collections being impacted by economic growth.
The September 2026 revenue report may be viewed here.