(The Center Square) – Buoyed by strong income tax receipts, Indiana’s general fund revenues for May exceeded expectations by nearly 9%. That’s according to a report released by Gov. Eric Holcomb’s office Friday.
In all, the state collected $1.59 billion in May, $126.6 million higher than the State Budget Agency forecasted for the month last December. It also beat the total Indiana received in May 2023 by $46.7 million.
“Notably, higher-than-expected collections from individual and corporate income tax and interest outweighed lower-than-expected collections in sales tax,” the office of the Chief Economist & Tax Analysis Hari Razafindramanana wrote in the report.
The sales tax, which accounts for about half of Indiana’s general fund revenues, generated $850.5 million for the month. While that was more than $13 million less than what state officials forecasted. That’s even after accounting for the removal of the gasoline sales tax from the general fund, which started in this fiscal year. Still, it managed to beat May 2023’s collections by $7.7 million.
For the most part, sales tax receipts indicate spending activity from the previous month.
Indiana generated $549 million in May from individual income taxes. That was 13.5% higher than the December forecast and topped the May 2023 collection by 11.8%.
With just one month left in the fiscal year, Indiana remains on pace to beat the forecast and exceed the previous year’s totals. At $19.09 billion, the general fund is beating state projections by nearly $150 million, or .8%. It’s also $393.9 million, or 2.1%, higher than where the state’s collections stood at the same time last year.
The state’s sales tax totals for the last 11 months have totaled $9.47 billion. That’s off by .9%, or $88.7 million, from officials’ estimates and $94.5 million through the same period last year. However, when gas tax contributions are removed from last year’s totals, the state expects to see 1.3% year-over-year growth.
Individual income taxes have generated $7.35 billion for the year. That’s 2.1%, or $152.4 million, higher than the December forecast and 5.8% more than what Indiana workers paid for the first 11 months of the 2022-23 cycle.
Income taxes have increased by nearly 6% even though lawmakers have accelerated rate cuts in recent years. The rate was 3.15% for the 2023 calendar year and 3.05% for 2024.
The increased individual tax revenue has offset cuts Indiana has endured in corporate income tax collections. The year-to-date total of $764.1 million is nearly $62 million less than the December forecast and roughly $160 million less than the amount the state collected through the same period last year.
State officials noted that the reduction in corporate tax payments has been affected by eliminating utility taxes and the timing of payments and refunds.
