Personal Taxes

Sturdy personal earnings tax progress once more leads income outcomes for January

by Timothy McQuiston, Vermont Business Magazine The usual suspects of personal income, corporate income and consumption taxes continue to bolster Vermont’s revenues.

Personal income, the most important General Fund revenue source, was nearly 12% over its target for the month. The volatile corporate income tax was over 81% ahead. And the rooms and meals tax was 28.3% above targets.

The General Fund and Education Fund revenues were above target for January and year-to-date. Transportation Fund revenues again lagged slightly for the month and the year.

Combined, General Fund, Transportation Fund, and Education Fund receipts in January were a combined $305.9 million, or 5.8%, above upwardly revised monthly consensus expectations.

Cumulative revenues remain 1.0% above revised consensus expectations for the first seven months of the state’s fiscal year.

General Fund revenues collected for the month totaled $215.8 million, or $16.4 million above the monthly consensus cash flow revenue target.

Fiscal year to date, General Fund revenues were $1,071.6 million, exceeding their target by $16.4 million or 1.6%.

This month’s revenue into the General Fund was underpinned by the positive performance of personal income taxes, meals and rooms taxes and corporate income taxes, all of which came in significantly above their respective consensus monthly target in January.

Revenues in the Transportation Fund were slightly below expectations for January, bringing in $21.2 million compared to the consensus cash flow target estimate of $21.7 million.

Fiscal year-to-date, the T-Fund brought in $166.2 million which was $0.44 million or -0.3% below the consensus cash flow target.

Last month, Transportation revenues continued their trend of lagging behind consensus expectations. January revenue in four of five major categories missed on the downside, albeit slightly, with only the motor vehicle fees component showing above target performance.

Despite the small underperformance, the T-Fund revenues remained within the range of consensus expectations.

The Education Fund revenues were $680 thousand or 1.0% above the monthly consensus cash flow target, having collected $68.8 million in January.

For the first seven months of the fiscal year, the Ed Fund received $405.5 million, which is 0.2% higher than the consensus cash flow target.

Monthly receipts into the Ed Fund continued to track above target, particularly in the two largest revenue components – Sales and Use, and Meals and Rooms – which more than offset slight underperformance in two other components – Motor Vehicle Purchase and Use, and Lottery.

Overall, revenues into the Ed Fund have been healthy over the course of the 2022 fiscal year.

With a few minor exceptions, revenue activity in January represented a healthy start to the second half of the 2022 fiscal year.

According to Secretary of Administration Kristin Clouser: “Revenue developments thus far in the fiscal year have been dominated by the twin effects of the lingering COVID pandemic, and the extraordinary period of expansive federal fiscal and monetary policy. We know the impact of this policy will soon begin to fade, and we are mindful that our spending decisions must reflect a return to a more normal revenue environment.”

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