(TRENTON) - The Department of the Treasury reported today that October revenue collections were above targeted growth, with collections for the major taxes totaling $2.639 billion, up $361.9 million, or 15.9 percent above last October. Year-to-date, total collections of $8.781 billion are up $784.4 million, or 9.8 percent above the same period last year.
October is typically the time when extension payments from certain individual and corporate taxpayers are received. Because income tax and corporation tax final payments were robust in the spring, these final extension payments were also strong in October, boosting tax collections. However, these growth rates are expected to moderate through the remainder of FY 2020.
The Gross Income Tax (GIT), in particular, benefitted from the strong final extension payments, totaling $1.149 billion for the month of October, up 9.1 percent above last October. GIT collections, which are dedicated to the Property Tax Relief Fund, totaled $3.831 billion, year-to-date, up 5.3 percent for the first four months of the fiscal year through the end of October.
The Corporation Business Tax (CBT), which was also boosted in part by strong final extension payments, reported $210.4 million, which is 165.3 percent above last October. Year-to-date through October, the CBT has collected $1.143 billion, or 24.4 percent more than last year. Growth is projected to moderate and decline in the coming months, because significant non-recurring payments received last year are not expected to repeat, and the temporary 2.5 percent surtax rate will drop to 1.5 percent on January 1, 2020.
As noted in last month’s September revenue update, concerns have been expressed by tax analysts that corporations may currently be overpaying state taxes up front while they analyze the tax base implications flowing from the federal Tax Cut and Jobs Act. In the current low interest rate environment, the cost of overpaying taxes is minimal. Accordingly, it is anticipated that corporations may begin filing for large refunds or reducing their tax payments once they have a better idea of their true tax liability.
The Sales and Use Tax, the largest General Fund revenue source, reported $977.2 million in October, up 9.0 percent over last October. Year-to-date, sales tax collections of $2.681 billion are up 8.5 percent from the same period last year. The summer and fall months continue to benefit from new revenues paid by certain remote online sellers, flowing from the U.S. Supreme Court’s Wayfair ruling. Adjusting for the additional remote seller revenue, underlying Sales and Use Tax collections are up a more moderate 5.1 percent year-to-date.