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February Revenue Collections Lower by 2.3 Percent Primarily Due to Higher Refund Activity

TRENTON - The Department of the Treasury reported today that February revenue collections for the major taxes totaled $2.802 billion, down $66.4 million, or 2.3 percent lower than last year. February is a relatively minor month for revenue collections, with no key payment due dates. The month saw declines in the Gross Income Tax and the Corporation Business Tax due to elevated and accelerated refund activity.

Treasury expects Fiscal Year 2024 collections to show moderate growth in the coming months, which was reflected in the updated FY2024 revenue forecasts in the Governor's Budget Message. Fiscal year-to-date, total major revenues of $26.062 billion are down $395.5 million, or 1.5 percent below for the same period last year.

February collections for the Gross Income Tax, which are dedicated to the Property Tax Relief Fund, totaled $1.284 billion, down $110.8 million, or 7.9 percent lower than last year. The decrease was primarily due to the acceleration of Tax Year 2023 refund issuances into late February, as opposed to the usual time frame of early March. The higher level of refunds for the month more than offset strong growth in employer withholding. Fiscal year-to-date collections of $10.760 billion are down $462.0 million, or 4.1 percent lower than at the same time last year.

The Sales and Use Tax (SUT), the largest General Fund revenue source, totaled $900.9 million, an increase of $16.8 million, or 1.9 percent over last year. February is typically one of the lowest months of the year for SUT collections, coming on the heels of January revenues which reflect holiday spending by consumers. Fiscal year-to-date collections of $7.687 billion are running $65.8 million higher, or 0.9 percent above the same period last year. SUT collections growth has now trended lower than the rate of regional core inflation for ten straight months.

The Corporation Business Tax (CBT), the second largest General Fund revenue source, totaled negative $112.0 million in February, a decrease of $106.6 million from last year. February is usually such a small month for CBT collections that refunds often exceed payments, and as a result the net CBT is often negative for the month. Fiscal year-to-date collections of $2.379 billion are down $246.9 million, or 9.4 percent lower compared to the same period last year.

February was an important month for the Insurance Premiums Tax (IPT), with the first prepayment of half the estimated calendar year liability due on March 1. February's initial collections of $294.1 million were $119.7 million, or 68.7 percent higher than last year. But March collections are still pending, as well as the second prepayment due on June 1. Year-to-date collections of $294.9 million are up $71.0 million, or 31.7 percent compared to the same period last year.

Petroleum Products Gross Receipts Tax (PPGRT) revenues of $111.9 million were $18.8 million, or 20.2 percent higher than a year ago. The monthly collections look particularly strong this February due to an artificially weaker February 2023. A payment that would have been accounted for in last February's total was instead realized the following month. Year-to-date collections of $853.5 million are running $26.4 million, or 3.2 percent above last year.

Please see the attached chart for monthly and yearly revenue collection comparisons.