The Urban Institute recently published its quarterly State Tax and Economic Review, which examines state tax revenues trends and the underlying economic factors.
They find that most states ended the year with surpluses. Yet states worry that the stimulus effect of the Trump tax cut is disappearing, forecasting weaker growth in income tax revenues for the fiscal year 2020.
These analyses are based on data gathered directly from individual states. This collection is the only timely and accurate data source covering state tax revenue and fiscal performance for baselines and comparisons.
State government tax revenues rebounded in the first quarter of 2019 after declines in the fourth quarter of 2018. However, year-over-year growth was substantially weaker in the first quarter of 2019 than in the final quarter of 2017 and the first three quarters of 2018. Most of the recent weakness was attributable to personal income tax declines.
State personal income taxes declined for the second consecutive quarter, reflecting a spike in state income tax payments in December 2017 and January 2018 in response to changes made in the TCJA. However, preliminary data for the second quarter of 2019 indicate double-digit growth in state personal income tax revenues, mostly because of higher final payments and delayed estimated payments filed in April. The surge in personal income tax revenues made up for earlier shortfalls in most states and put the revenues back on track for the states to close the budget books for fiscal year 2019 without shortfalls.
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