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State Income Tax Revenues Top Projections for December

January 15, 2018

On January 3, the California Legislative Analyst’s Office (LAO) issued a statement reporting that California income tax revenues ran much higher than projections ’ presumably due to taxpayers making early payments due to pending changes under the new federal tax law that was approved by the U.S. Congress and signed by President Trump last month. The LAO’s statement said:

December is a major revenue month for the state General Fund. As shown in the table below, the state’s two income taxes (the personal and corporate income taxes) combined were nearly $4 billion (32%) above the monthly target reflected in last June’s state budget plan. The positive December personal income tax results could be partially offset by softer January and April collections, as some taxpayers may have made final 2017 tax payments a few months early in order to maximize deductions under the recently passed federal tax plan. (We discuss incentives for individuals and businesses to accelerate or defer income or expenses in this Twitter thread.)

Figure: December income taxes nearly $4 billion above budget projections

The information above represents preliminary data from the state’s tax agencies. It is subject to change. Sales tax collection information for December will emerge in the coming days.

The projections above were those included in the June 2017 state budget plan. The administration will release updated monthly revenue projections in conjunction with release of the Governor’s 2018-19 budget plan on January 10.

Follow @LAOEconTax on Twitter for regular California economy and tax updates.

Source:  California Legislative Analyst’s Office

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