State tax collections continue to increase

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Most of us finished our annual federal tax filing by April 15.

Most of us also wrapped up our state filing duties then, too, since most of the states that collect income tax from their residents follow the Internal Revenue Service schedule.

State taxes tend to get overlooked in the yearly focus on tax tasks. But just like Uncle Sam, every state has to come up with operational funds.

And they’ve been doing a darn good job at that.

State government tax revenue has increased for four straight years, according to U.S. Census Bureau. In fact, says Uncle Sam’s data collection agency, 33 states reported an increase over their previous year’s total tax collections.

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Growing state tax revenue

The latest look at state government tax collections from the Census Bureau shows that in fiscal year 2014, states brought in almost $866 billion.

The $865.8 billion in state taxes last fiscal year was a 2.2 increase over fiscal 2013’s $847.1 billion.

Individual income tax accounted for $310.8 billion of the states’ tax collections in fiscal 2014. That’s a slight increase of 0.4 percent or $1.1 billion from the $309.7 billion states collected in fiscal 2013.

And while not as much in raw dollars, state sales and gross receipts taxes saw the largest percentage growth. State treasuries took in $271.3 billion in these taxes last fiscal year, an almost 5 percent increase over the prior year’s $258.9 billion collected in these areas.

Best at collecting taxes

My native state of Texas landed in the top three in both percentage increases in total tax revenues and dollar amount increases from fiscal year 2013 to 2014. And we don’t even have a state income tax!

States with the highest percentage increases in fiscal 2014 total tax revenues over 2013 were:

  • North Dakota, with an increase of 15.5 percent from $5.3 billion to $6.1 billion;
  • New Mexico, with an increase of 6.9 percent, from $5.4 billion to $5.8 billion; and
  • Texas, with an increase of 6.7 percent, from $51.8 billion to $55.3 billion.

In the dollar amount breakout, the states with the largest increases in total tax revenues from fiscal year 2013 to 2014 were:

  • California, with an increase of $4.9 billion (3.7 percent increase), from $133.2 billion to $138.1 billion;
  • Texas, with an increase of $3.5 billion (6.7 percent increase), from $51.8 billion to $55.3 billion; and
  • New York, with an increase of $3.3 billion (4.5 percent increase), from $73.7 billion to $77 billion.

Worst at collecting taxes

At the other end of the revenue scale, Alaska has the dubious distinction of topping both the list of states that recorded the largest percentage drop in tax collections and the list of states with the most dollar drops in tax revenue from fiscal 2013 to 2014.

The three states with most state tax revenue decreases, percentage-wise, were:

  • Alaska, which saw its tax revenue drop 33.9 percent, from $5.1 billion to $3.4 billion;
  • Delaware, with a decrease of 5.1 percent, from $3.3 billion to $3.2 billion; and
  • Kansas, with a decrease of 3.8 percent, from $7.6 billion to $7.3 billion.

Looking strictly at state treasury dollars, the three states that lost the most money were:

  • Alaska (again), with a drop of $1.7 billion, or the 33.9 percent noted above;
  • Ohio, with a decrease of $496.3 million, a 1.8 percent decrease, from $27.5 billion to $27 billion; and
  • Arizona, which lost $387.6 million, a 2.9 percent decrease, from $13.5 billion to $13.1 billion.

We’ll have to wait for the next Census Bureau look at state tax collections to see how much the money you paid this filing season will affect your state’s balance sheet. The fiscal 2015 numbers should be particularly interesting, thanks to some sweeping changes in many state tax laws, including cuts in income tax rates.

Did you see a marked change in your state tax bill this filing season? Did you end up paying more or less than last year?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.


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