Arkansas ended its fiscal year in June with total tax revenue down 4% compared with the previous fiscal year, and a surplus of $367.9 million. The fiscal year tax revenue was 1.7% above the forecast.
Fiscal year (July 2024-June 2025) tax revenue is $8.359 billion, down 4% compared with the previous fiscal year, according to Wednesday’s (July 2) report from the Arkansas Department of Finance and Administration (DFA).
Income tax revenue was $3.594 billion, down 6.6% compared with the previous fiscal year and 1.1% above the forecast. Sales tax revenue was $3.527 billion, up 1.4% compared with the previous fiscal year, and 0.4% above the forecast.
Corporate income tax revenue was $533.1 million, $211.8 million below the same period in the previous fiscal year, but 15.7% above the forecast.
The DFA report again noted that lower tax rates were the primary cause of fiscal year income and corporate tax revenue declines. Legislators in a 2024 special session voted to reduce the top personal income tax rate from 4.4% to 3.9% and the top corporate income tax rate from 4.8% to 4.3%.
“Arkansas had strong economic performance in fiscal year 2025,” DFA Secretary Jim Hudson said in a statement. “This includes being first in the nation for GDP growth in the fourth quarter of 2024, fifth in the nation for GDP growth for the first quarter of 2025, sixth in the nation for personal income growth in the first quarter of 2025, an upgrade to our bond rating to AA+ by S&P, continued low unemployment, and a top ten ranking among all states in economic outlook.”
The state ended the previous fiscal year with a $698.4 million surplus. The state ended the fiscal year before that with a $1.161 billion tax revenue surplus. The surplus of $1.161 billion was the third consecutive year of a surplus of near or more than $1 billion.
JUNE REVENUE
June income and corporate tax revenues were above forecast because fewer taxpayers used a filing extension granted as a result of severe weather, according to the DFA report. Some payments expected in July and August were paid in June.
Total revenue in June was $921 million, 2.6% above June 2024, and 14.8% above the budget estimate. June income tax revenue was $298.7 million, up 11.6% compared with June 2024 and 9.9% above the budget forecast.
June sales tax revenue was $307 million, up 4% compared with June 2024, and 2.7% above the budget estimate. Corporate income tax revenue in June was $85.8 million, down $16.9 million compared with June 2024 and $67.3 million above the budget estimate.
OTHER REVENUE SOURCES
Tobacco
July 2024-June 2025: $182.9 million
July 2023-June 2024: $193.3 million
Insurance
July 2024-June 2025: $281.8 million
July 2023-June 2024: $208.4 million
The increase in insurance revenue was the result of a $51.7 million transfer from the Insurance Department to general revenue, according to the DFA.
Alcoholic beverages
July 2024-June 2025: $78.1 million
July 2023-June 2024: $78 million
Games of skill
July 2024-June 2025: $62 million
July 2023-June 2024: $59.1 million
Severance
July 2024-June 2025: $10.6 million
July 2023-June 2024: $11.8 million
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