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Updated "Big Three" Revenue Outlook August 21, 2025
Revenues Presently on a Path to Beat Budget Expectations. Our updated forecast anticipates revenues from the state’s three largest taxes (income, corporation, and sales) will come in above the level assumed in the recently adopted state budget. This upgraded outlook is entirely attributable to higher expectations for income tax collections. Income tax collections are being driven higher by enthusiasm around artificial intelligence, which has pushed the stock market to record highs and boosted compensation among the state’s tech works. Given this, we suggest approaching the improved revenue outlook with guarded optimism. Further, the state was expected to enter the next budget cycle with a sizable operating deficit. This fact, combined with the state's complicated Constitutional budget rules, means revenue improvements are likely to translate to smaller deficits, rather than new budget capacity.
Firearms and Ammunition Revenue Update (2025 Q2) August 18, 2025
Beginning July 2024, Chapter 231 of 2023 (AB 28, Gabriel) imposed an 11 percent excise tax on retail sales of firearms, firearm precursor parts, and ammunition, with some exemptions. For firearm and ammunition excise tax returns filed for 2024-25, the total amount of tax due is $58 million—a bit lower than the budget package revenue assumption.
Income Tax Withholding Tracker August 7, 2025
Income tax withholding in July came in $402 million (5 percent) above newly released projections included in the 2025-26 budget agreement. July income tax withholding grew by about 14 percent above the prior year level. The recent trend in withholding remains strong by historical standards.
Cannabis Tax Revenue Update (2025 Q1) June 3, 2025
For cannabis excise tax returns filed for the first quarter of 2025, the total amount of tax due is $141 million. With this latest data, we currently project cannabis tax revenues of $594 million in 2024-25 and $732 million in 2025-26. Both of these estimates are within $5 million of the administration's May Revision forecast.
Firearms and Ammunition Revenue Update (2025 Q1) May 21, 2025
Beginning July 2024, Chapter 231 of 2023 (AB 28, Gabriel) imposed an 11 percent excise tax on retail sales of firearms, firearm precursor parts, and ammunition, with some exemptions. For firearm and ammunition excise tax returns filed for the first three quarters of 2024-25, the total amount of tax due is $44 million. Based on this data, the administration's estimate of $65 million for 2024-25 appears reasonable.
Five Guidelines for Using Revenue Forecasts May 9, 2025
As part of building the state budget each year, the Legislature and Governor must make an assumption about how much revenue the state will collect. Because no one knows how much revenue the state will collect next year, leaders must rely on revenue forecasts. Both our office and the Department of Finance (DOF) provide periodic revenue forecasts that can be used for this purpose. These forecasts use the best available data to provide informed estimates of future revenue collections. Although they have limitations, they are important to the state budget process because they offer an objective foundation on which the budget can be built. In this post, we offer guidelines to help make the best use of these revenue forecasts—that is, to help them focus on the right questions, avoid overreactions, and be better positioned for the unexpected.
Cannabis Tax Revenue Update (2024 Q4) March 6, 2025
Our new cannabis tax revenue estimates are very similar to the revenues anticipated by the Governor's Budget.
Firearms and Ammunition Revenue Update February 21, 2025
In the first half of 2024-25, preliminary revenue for the firearms and ammunition excise tax was $29 million.
Cannabis Tax Revenue Update (2024 Q3) December 3, 2024
Our new forecast for 2024-25 cannabis tax revenue is $653 million, somewhat lower than the May Revision forecast of $695 million.
Cannabis Tax Revenue Update (2024 Q2) September 4, 2024
Our new cannabis tax revenue estimates are similar to the revenues anticipated by the 2024-25 budget package.
Cannabis Tax Revenue Update May 31, 2024
Our new forecast for 2023-24 cannabis excise tax revenue is $649 million, slightly below the May Revision forecast of $665 million.
Cannabis Tax Revenue Update: February 2024 February 27, 2024
Our new forecast for 2023-24 cannabis retail excise tax revenue is $675 million, very close to the January Governor’s Budget forecast of $660 million.
Recent Revenues Coming in Below Governor's Budget Projections January 22, 2024
In the first few weeks of January, real-time personal income tax (PIT) revenue collections are running $3 billion to $4 billion short of the January target for current year revenue projections included in the 2024-25 Governor's Budget.
Cannabis Tax Revenue Update: November 2023 November 30, 2023
Our new forecast for 2023-24 cannabis retail excise tax revenue: $702 million. This is $206 million above the budget package assumption.
Cannabis Tax Revenue Update August 30, 2023
The 2023-24 budget package anticipated a funding shortfall for programs supported by cannabis tax revenues. Our new revenue estimates are higher, yielding a smaller funding shortfall.