(The Center Square) – Kentucky general fund revenues continue to exceed expectations as the state’s budget director announced this week that more than $1.4 billions entered the state’s coffers last month.
The January collections were up nearly 5%, or about $66 million, from what the state reported in January 2024. According to a statement from the Budget Director John Hicks, revenue from income, sales, business, property and other taxes could fall by 3% for the rest of the budget cycle and Kentucky would still meet its budget forecast for the fiscal year.
General fund revenues through the first seven months stand at nearly $9.3 billion, an increase of almost $200 million compared to the first seven months of the 2023-24 fiscal year.
Sales tax revenue remained particularly strong as Kentucky set a January record by collecting $603 million. It is the first-time sales tax revenue topped $600 million in January, and it was almost 3% higher than January 2024’s total of $586.2 million, which was the previous record. For the 2024-25 fiscal year, sales tax revenue is up by .9% at more than $3.5 billion.
Business income tax receipts went up nearly five-fold from last year as January’s receipts totaled $132.5 million. The state received just $26.6 million in January 2024. For the fiscal year, revenue from those taxes has nearly doubled from last year as the $1.1 billion in revenue is an increase of more than 90% improvement.
“Strong business taxes, coupled with a resilient consumer behavior, are indicative of a vibrant state economy where wage growth leads to consumer growth and profit opportunities for the corporate sector,” Hicks said.
Other taxes that saw year-to-year revenue increases included property taxes, which at $113.5 million were up almost 7% from the previous year.
With the personal income tax rate dropping in January, revenue from the tax fell by 9.4% from January 2024 as the state received $439.2 million, a decrease of roughly $45.5 million.
Kentucky’s income tax rate for the 2024 calendar year was 4%, down from 4.5% in 2023. The 4% rate will remain in effect this year. However, the General Assembly has already passed legislation to cut the rate to 3.5% next year, and Gov. Andy Beshear signed that measure into law earlier this month.
Other revenue declines included the state’s coal severance tax, which at $4.4 million in January were down almost 56% from the nearly $10 million the state collected in January 2024. Kentucky has received $39.2 million from the tax through the first seven months of the fiscal year, down more than 10% from the $43.7 million reported from the same period last year.
Cigarette tax proceeds also fell by more than 25% with Kentucky generating nearly $17 million from the levy in January, compared to $22.7 million in January 2024. Overall, the $144.5 million collected so far during the fiscal year is down nearly $18 million from the 2023-24 fiscal year.
