Strong February pushes state tax haul $1B over benchmark
The state has already taken about a billion dollars more in taxes than they predicted they would, according to the Department of Revenue.
“FY2023 year-to-date collections totaled approximately $23.651 billion, which is $37 million or 0.2% less than collections in the same period of FY2022, but $999 million or 4.4% above the year-todate benchmark,” the department said with the release of their February tax report.
Depending on how you do the math, it’s even more than that.
“After adjusting for (pass through entity) excise, FY2023 year-to-date collections are $1.058 billion or 4.7% more than collections in the same period of FY2022 and $572 million or 2.5% more than the year-to-date benchmark,” they wrote.
February is the month in which revenues are historically the smallest, generally accounting for just 6% of total yearly revenue, according to the department. Despite that, this year the state’s coffers grew by 9% more than they did last February and millions more than predicted.
“Preliminary revenue collections for February totaled $1.979 billion, $163 million or 9.0% more than actual collections in February 2022, and $49 million or 2.5% above benchmark,” the department wrote.
The strong revenue performance comes just as people begin to file for tax returns and was partially fueled by higher than expected retail sales last month, according to Commissioner Geoffrey Snyder.
“February collections increased in withholding, sales and use tax, and ‘all other tax’ in comparison to February 2022,” Commissioner Snyder said with the release of February’s report.
“These increases were partially offset by decreases in non-withholding income tax. The increase in withholding is likely related to labor market conditions and the increase in sales and use tax reflects, in part, continued strength in retail sales. The increase in ‘all other tax’ is primarily attributable to estate tax, a tax category that tends to fluctuate,” he continued.
Most of February’s revenue arrived via withholding taxes, which accounted for $1.309 billion. That’s about what was expected by lawmakers, but still 6% more than last year.
Income taxes accounted for $972 million, about $47 million less than was forecast and yet 6.6% more than 2022.
Sales and use tax collections for February totaled $674 million, $71 million or 11.7% above the benchmark, and $70 million or 11.6% more than February 2022.
Last year’s tax revenue came in at such historic levels that a rarely used 1986 law was triggered and the state forced to send about $3 billion in taxes back to residents.
This fiscal year will end with the month of June. Former Gov. Charlie Baker’s last budget included a prediction the state would take about $39.6 billion in taxes from residents and businesses in fiscal 2023.