Indiana’s revenues are down as tax collections continue to lag behind estimates, according to November’s state revenue report. Projections are based on analysis from December 2023 and due for an update next month.
Last year, estimates put revenues at nearly $6.6 billion, or $243 million more than the actual year-to-date revenues, which totaled under $6.4 billion. That number is also 3.1% less than what Indiana had in its coffers the year prior.
Collections have fallen nearly across the board, including sales taxes, individual income taxes and corporate taxes.
Sales taxes missed the mark by $68 million, totaling $3.5 billion, while individual income taxes came in $121 million lower than expected at under $2.2 billion. Corporate taxes totaled $187 million, or $124 million less than anticipated.
Sales taxes were still slightly higher — by $41 million — than the year before while individual and corporate income taxes were below 2023 totals by $193 million and $71 million, respectively.
“Year-over-year comparisons are impacted by factors such as timing of payments and refunds, the reduction in the state individual income tax rate (effective January 1, 2023), changes in tax requirements associated with the pass-through entity tax, and more,” an attached revenue commentary said.
In Fiscal Year 2023, there were more months with five Fridays, which can boost collections by 10-20% during that month.
One revenue source was unexpectedly high, offsetting the above numbers. High interest rates, which are controlled at the federal level, continued to boost Indiana’s bottom line. Rather than the expected $125 million return, Indiana received nearly $204 million, or $78 million more.
Riverboat betting was also slightly higher than anticipated, returning $1.5 million more than the expected $3.8 million, for a total of $5.3 million.
Budget writers heading into the 2025 legislative session have already warned that belts will be tighter this cycle, even as lawmakers consider big spending asks for roads and Medicaid. Legislators will convene in January.