State Tax and Economic Review, 2022 Quarter 4

Total state government tax revenue collections declined 0.4 percent in nominal terms and 6.4 percent in real terms in the fourth quarter of 2022 relative to a year earlier. Revenue growth rates varied considerably among major revenue sources and across states in the fourth quarter of 2022. Real personal income tax revenues declined 15.7 percent, while real corporate income tax revenues increased 4.2 percent in the fourth quarter of 2022 compared with the same quarter in 2021. Real sales tax collections were flat while real motor fuel tax collections declined 9.4 percent in the fourth quarter of 2022.

Preliminary data for the first quarter of 2023 indicate substantial weakness in overall state tax revenue collections, as well as in major sources of state tax revenues. This weakness was expected and is partly in response to state policy actions, including tax rate cuts and rebate payments. Total state tax revenues declined 8.8 percent in nominal terms and 13.4 percent in real terms int the first quarter of 2023 compared with the same period in 2022.