Treasury: Revenues Track Closely to Targets, Despite May Dip Due to Shift in Last Year’s Income Tax Filing Deadline

(TRENTON) — The Department of the Treasury reported that May revenue collections for the major taxes totaled $3.282 billion, down $2.072 billion, or 38.7 percent, below last May. This dip was expected due to the fact that the deadline for filing individual income tax returns was postponed to May 17 last year, creating a surge in filings that typically come in during April. However, fiscal year-to-date, total collections of $40.816 billion are up $6.679 billion, or 19.6 percent above the same eleven months last year.

The Treasurer presented revised revenue forecasts to the Legislature’s Budget Committees in mid-May. For Fiscal Year (FY) 2022, the total revenue forecast increased by $4.5 billion above the prior forecast in the Governor’s Budget Message issued in March. The largest forecasting increases were for the Gross Income Tax (GIT), up $3.0 billion; the Pass-Through Business Alternative Income Tax (PTBAIT), up $600.0 million; the Corporation Business Tax (CBT), up $315.9 million; and the Sales and Use Tax, up $194.0 million. Overall, revenues through May are tracking closely to these revised forecasts.

May collections for the Gross Income Tax (GIT), which is dedicated to the Property Tax Relief Fund, yielded $1.031 billion, down $2.0 billion, or 66.0 percent lower than last May. However, fiscal year-to-date collections of $18.166 billion are up $3.074 billion, or 20.4 percent. As noted, the May year-over-year comparison is distorted by the filing deadline postponement in 2021.

GIT growth at the close of FY2022 is still strong despite the substantial increase in Pass-Through Business Alternative Income Tax (PTBAIT) credit claims. PTBAIT credits are expected to increase by about $1.7 billion over last year. While these credits reduce GIT liabilities, Tax Year 2021 income tax growth has been markedly strong enough to overcome the higher PTBAIT credits.

PTBAIT collections of $29.3 million decreased by $146.6 million, or 83.3 percent in May, due to an extension of the quarterly payment filing deadline to June 15, which was approved by the Division of Taxation for this year. However, fiscal year-to-date total PTBAIT collections of $3.086 billion are $1.255 billion, or 68.5 percent, above the same eleven months last year, with significant additional growth expected in June.

The Sales and Use Tax, the largest General Fund revenue source, reported $996.2 million for May, an increase of $100.0 million, or 11.2 percent, over last May. Fiscal year-to-date revenues of $10.210 billion are up $1.105 billion, or 12.1 percent higher, than the same period last year. Treasury noted that moderation in Sales Tax growth is expected in future months, as the consumer boost from last year’s federal stimulus payments fades.

The Corporation Business Tax (CBT), which is the second largest General Fund revenue source, reported collections of $301.6 million for May, a decline of $6.3 million, or 2.0 percent. CBT final payments showed strong growth, but were offset by a decline in estimated payments and a surge in refunds. Fiscal year-to-date, CBT collections of $4.564 billion are up $793.6 million, or 21.0 percent, above the same period last year, primarily due to strong growth in 2021 corporate profits.