(The Center Square) – Indiana started the 2023-24 fiscal year with receipts in July that beat budget estimates.
The Indiana State Budget Agency released its monthly report for July, showing the state received $1.6 billion in revenue. That exceeded the official forecast released in April by roughly $8 million or .5%. It also topped the state’s receipts for July 2022 by $118.1 million or 8%.
Collections on individual income taxes fueled the increase. The $566 million Hoosier workers paid in July was $15 million more than state officials expected for the month, and it was 20.5% better than the $469.8 million the state received in July 2022.
Even though the state’s income tax rate is lower this year – 3.15% to 3.23% in 2022 – the calendar worked in the state’s favor as last month featured five Fridays, the day many Indiana workers receive their paychecks.
“Historically, the number of Fridays affects the timing of payments from month to month, and the revenue impact has typically been between 10 to 20% greater whenever a month has the fifth Friday compared to the more common four Fridays in a month,” the budget agency said in its commentary.
According to the agency, interest earnings also came in much higher than expected. At $51 million, the actual revenue nearly doubled the state forecast of $26.7 million, and it was more than five times the $8.1 million the state received in July 2022.
While personal income taxes surpassed expectations, Indiana’s sales and corporate taxes failed to meet July budget forecasts.
The state reported sales and use tax revenue of $877.1 million last month. That was $7.5 million less than what the state received in July 2022, and it was more than 3% off the $904.8 million state officials expected.
Part of the decline in sales tax revenue came from the state no longer sending gasoline use taxes into the general fund. That accounted for $14 million of the July 2022 sales tax.
“Year-over-year differences and fluctuations from month-to-month are expected as outlined by the evolving economic, seasonal, and policy dynamics presented in the April 2023 revenue forecast,” the budget agency said in its statement. “Sales tax collections excluding gasoline use tax are projected to grow by 4.1% year-over-year for FY 2024 compared to 5.2% in FY 2023, 9.9% in FY 2022, and 13.9% in FY 2021.”
Indiana received $21.2 million in corporate taxes last month. That was more than 15% lower than the budget forecast and nearly 37% less than the state received in July 2022.
Corporate taxes are typically paid quarterly, with state officials saying September, January, April and June are the months with the highest revenues.
