Quarterly Tax Take Surpasses Record FY 2022 Pace

The collectors at the Department of Revenue took in $4.187 billion in tax revenue last month, putting the state’s coffers more than 5 percent ahead of the pace that led to a massive surplus in the last budget year, with one quarter of fiscal 2023 now in the books.

September receipts came in $194 million or 4.9 percent higher than actual collections from September 2021, and $224 million or 5.7 percent above DOR’s September benchmark of $3.963 billion. Through the first quarter, fiscal 2023 collections have totaled about $9.194 billion — $443 million or 5.1 percent ahead of fiscal 2022 collections over the same period of time and $224 million or 2.5 percent higher than DOR’s year-to-date benchmark.

“September collections were above monthly benchmarks and above collections from the same period last year. September revenue included increases in most major tax types relative to September 2021 collections, including increases in withholding, non-withholding income tax, and sales, and partially offset by a decrease in corporate and business tax,” Revenue Commissioner Geoffrey Snyder said in a statement. “The increase in withholding is likely related to strong labor market conditions. The increase in sales tax reflects continued strength in retail sales.”

After adjusting for a pass-through entity excise that officials have said has affected comparisons, year-to-date tax collections are $231 million or 2.6 percent greater than collections in the same period of fiscal 2022 and $169 million or 1.9 percent more than the year-to-date benchmark, DOR said.

While DOR has now established monthly revenue benchmarks for September through June 2023, there is a good chance the agency will adjust those expectations as the budget year goes on. The benchmarks are all based on the assumption (agreed to by legislative leaders and the Baker administration) that fiscal 2023 revenue will total $39.618 billion. That would be a drop of almost 4 percent from the $41.105 billion that was hauled in during fiscal year 2022, a year in which state tax revenue surged so high compared to wage growth that it triggered a long-forgotten tax relief law.

Estimated payments are required from many corporations and individuals in September, DOR said, which makes the month a significant one for state tax collections. The month generally accounts for 10 percent of the annual haul, making it the “third or fourth largest revenue month of the year,” DOR said.

October revenues will be due from DOR on Thursday, Nov. 3. The benchmark for October collections has been set at $2.066 billion, DOR said.