Georgia’s tax revenues plummet in October due to tax suspension and hurricane extension

article

Georgia State Capitol (FOX5)

ATLANTA – Georgia’s net tax collections in October totaled $2.53 billion, a decrease of $89.7 million, or 3.4 percent, from the previous fiscal year, when collections totaled $2.62 billion. Year-to-date, Georgia’s net tax collections have reached almost $10.64 billion, down $61.1 million, or 0.6 percent, from the October 2023 figure of $10.7 billion.

The decline in revenue is largely attributed to two factors: the 2023 motor fuel tax suspension and hurricane-related tax filing and payment extensions. If motor fuel tax changes are not corrected, revenues in October are down 7.7 percent compared to the same month last year and 1.9 percent year-to-date. The extension, announced on October 3, delays October 2023 through April 2025 income tax filing and payment deadlines until May 1, 2025, and will likely impact individual and corporate income tax collections, excluding payroll withholding.

Individual income tax collections fell 8.7 percent to about $1.26 billion, compared to $1.38 billion last October. Contributing factors include:

• Withholding payments decreased by $49.3 million, or 3.8 percent.
• A 36.5 percent decrease in individual income tax return payments, a decrease of $104.3 million.
• There was a $27.2 million, or 10 percent, decrease in refunds issued (excluding gaps).
• Other individual income tax payments, such as estimated payments, increased by $6.8 million.

Gross sales and use tax collections reached $1.51 billion, a slight increase of $2.3 million, or 0.2 percent, from last year. But net sales tax revenue fell 1 percent, dropping $7.5 million. Additionally, the state’s adjusted sales tax distribution to local governments fell $4.3 million, or 0.6 percent, to $748 million. Sales tax refunds increased by $14.1 million compared to last October.

Corporate tax revenue decreased by 47.4 percent, reaching $69.5 million. This includes:

• $37.9 million increase in corporate tax refunds.
• There was a 40.8 percent decrease in corporate tax return payments, down $23.5 million.
• A $1.4 million reduction in other corporate tax payments, including estimated payments.
• Motor fuel tax collections increased 146.1 percent, up $105.6 million from October 2023. This increase follows the fuel tax suspension that Gov. Brian Kemp introduced in September 2023 to alleviate high gas prices.
• Motor vehicle tag and title fee collections remained steady at $32.1 million. However, title deed valorem tax (TAVT) collections fell by $6.2 million, or 8.5 percent.

The decline in Georgia’s tax revenue underscores the combined impact of policy decisions, economic conditions and external events that continue to impact the state’s finances.