(The Center Square) – Tennessee’s revenues for the first month of fiscal year 2026 were $15.6 million higher than estimated in August, but expected corporate tax revenues were down by nearly 35%, according to the Department of Finance and Administration.
The sales tax revenue increased the most, according to the August revenue report. Collections were $25.6 million higher than forecast and $63.4 million higher than last year.
Fuel taxes were $3.1 million above estimates and other taxes were $3.2 million.
Overall tax collections were up by $57.6 million when compared to 2024, according to the revenue report.
Lawmakers passed corporate tax breaks in 2024 that have slowed collections. The report shows August numbers for corporate taxes were $16.3 million below predictions and $9.7 million less than last year.
Department of Finance and Administration Commissioner Jim Bryson said he was encouraged by the start of the new fiscal year and is remaining cautiously optimistic about continued growth.
“August revenues exceeded expectations,” Bryson said. “Sales tax receipts, which reflect consumer activity from July, demonstrated strong growth compared to the same month last year. Although corporate tax collections fell short of projections, all other revenue sources surpassed expectations for the month.”
A drop in corporate revenue drove down Tennessee’s year-end tax revenues for fiscal year 2025 when compared to the previous year. The state collected $721 million less in corporate taxes than in the previous year. Overall, the state collected $75.2 million less in FY 2025 than in FY 2024.
Democrats have chided the corporate tax cuts.
“Last year, more than 40% of Tennessee’s budget came from the federal government,” said Brandon Puttbrese, spokesman for the Senate Democratic Caucus, in an interview last month with The Center Square. “Now, with the Trump budget law passed in July slashing funding for health care, food assistance, and education, we’re facing a one-two punch: deep federal cuts on top of a $721.5 million drop in corporate tax collections here at home. The question is: how will Republican leaders in Tennessee fill those gaps?”
