Policy Analysis | February 2021

State Tax Collections in the SLC Region Amid the COVID-19 Pandemic

Cody Allen

The spread of the COVID-19 pandemic throughout the nation caused shockwaves in the first quarter of 2020,* as the pandemic – and subsequent public health and safety measures – lead to an unprecedented economic downturn. States struggled as their traditional sources of revenue saw immediate drops, and economic uncertainty precluded the accuracy of revenue projections for the months ahead. The distribution of vaccine shipments to states in December led to renewed optimism that the fiscal situation for state, federal and local governments would soon improve. However, economists have cautioned that a full economic recovery may not be seen until the end of 2022, dependent, in large measure, on the levels of continuing federal financial support.1

The National Association of State Budget Officers notes the bulk of state general fund revenue is derived from personal income and sales taxes – 44.9 and 30.1 percent, respectively.2 According to the U.S. Census Bureau, for the third quarter of 2020, 11 states in the South received their largest share of revenue from the collection of individual income taxes, with just four – Florida, Mississippi, Tennessee and Texas – reporting general sales and gross receipts as their largest tax revenue source.3

Using data collected by the Census Bureau for its Quarterly Summary of State and Local Taxes, this SLC Policy Analysis compares year-to-date state and national tax data through the third quarter of 2020, ending September 30. Revenue for the fourth quarter of 2020 is not yet available, due to the lag in federal reporting, and is anticipated to be released in mid-March 2021. This policy analysis will be updated as additional quarterly figures are made available.

Due to the unavailability of fourth quarter 2020 data, this analysis highlights revenue figures by comparing selected tax collections data through the third quarter of 2020 to collections for the first three quarters of 2019, specifically:

  • Total tax collections;
  • General sales and gross receipts tax collections;
  • Individual income tax collections; and
  • Motor fuels sales tax collections.4

* All references to quarter in this analysis reflect calendar year, not fiscal year, data.

The Census Bureau's figures for the United States total do not include the District of Columbia or territories.

For reference, the summary for the fourth quarter of 2019 was not released until March 17, 2020.


Table 1
Average year-over-year (YOY) percent change in regional tax collections year-to-date (Q1-Q3 2019/2020)
Region Total Collections General Sales Individual Income Motor Fuels
East -6.5 -4.6 -6.6 -13.4
Midwest -2.5 -1.4 -5.3 6.9 §
South -2.7 -2.3 2.2 -6.7
West -5.4 -8.5 -1.3 -10.5
U.S. -4.4 -4.2 -3.1 -6.2

§ Without Illinois' unique 78.6 percent increase, the Midwestern average for motor fuels collections is -3.4 percent.

While every region was impacted by the pandemic, and subsequent public safety restrictions, the Midwest and South experienced significantly less of a reduction in year-over-year tax collections, on average, compared to other regions and the national average. The Southern region's growth in average individual income tax collections primarily can be attributed to Arkansas's collections success, as the only SLC member state to realize a double-digit increase for the first three quarters of 2020, compared to 2019. Arkansas's growth of more than 19 percent – the most nationally – is attributable to strong revenues, and low refunds, during the first three quarters of 2020.5 Notably, there is some variation among the four regions in terms of primary tax revenue sources. For example, five states – Alaska, Delaware, Montana, New Hampshire and Oregon – do not have a state sales tax, and an additional seven states do not levy a tax on individual income, interest or stock dividends.


Table 2
Year-over-year (YOY) percent change in total tax collections per financial quarter (in millions, Q1-Q3 2019/2020)
State Q1 2019 Q1 2020 Percent change (YOY) Q2 2019 Q2 2020 Percent change (YOY) Q3 2019 Q3 2020 Percent change (YOY)
Alabama $2,916 $3,100 6.3 $3,290 $2,752 -16.4 $2,839 $3,597 26.7
Alaska $342 $278 -18.7 $486 $226 -53.5 $363 $380 4.7
Arizona $3,891 $3,793 -2.5 $5,177 $4,096 -20.9 $4,604 $5,447 18.3
Arkansas $2,130 $2,236 5.0 $3,068 $2,804 -8.6 $2,403 $3,264 35.8
California $47,152 $49,047 4.0 $63,388 $34,710 -45.2 $44,671 $65,929 47.6
Colorado $3,317 $3,476 4.8 $4,638 $3,282 -29.2 $3,875 $4,979 28.5
Connecticut $4,689 $4,671 -0.4 $7,445 $3,467 -53.4 $2,745 $2,965 8.0
Delaware $1,210 $1,242 2.6 $1,606 $1,391 -13.4 $979 $1,161 18.6
District of Columbia $2,359 $2,408 2.1 $2,141 $1,676 -21.7 $2,886 $2,971 2.9
Florida $11,257 $11,734 4.2 $12,843 $9,857 -23.3 $11,196 $10,863 -3.0
Georgia $5,318 $5,651 6.3 $6,735 $5,351 -20.5 $5,916 $7,263 22.8
Hawaii $1,978 $2,067 4.5 $2,385 $1,762 -26.1 $2,111 $1,412 -33.1
Idaho $989 $1,169 18.2 $1,608 $1,685 4.8 $1,240 $1,451 17.0
Illinois $10,850 $12,150 12.0 $13,583 $11,167 -17.8 $10,911 $13,774 26.2
Indiana $4,915 $5,245 6.7 $6,703 $5,311 -20.8 $4,886 $5,845 19.6
Iowa $2,474 $2,536 2.5 $3,595 $3,278 -8.8 $2,060 $2,160 4.9
Kansas $2,449 $2,730 11.5 $3,301 $2,452 -25.7 $2,239 $2,770 23.7
Kentucky $2,991 $3,181 6.4 $3,469 $3,216 -7.3 $3,121 $3,227 3.4
Louisiana $2,605 $2,708 4.0 $3,507 $2,782 -20.7 $3,236 $3,681 13.8
Maine $908 $975 7.4 $1,401 $1,408 0.5 $1,292 $1,260 -2.5
Maryland $5,373 $5,644 5.0 $8,386 $6,482 -22.7 $5,166 $5,037 -2.5
Massachusetts $7,249 $7,530 3.9 $10,008 $6,565 -34.4 $7,616 $7,642 0.3
Michigan $6,413 $4,352 -32.1 $6,615 $5,773 -12.7 $9,185 $9,512 3.6
Minnesota $6,214 $6,197 -0.3 $9,167 $7,102 -22.5 $6,671 $7,826 17.3
Mississippi $1,830 $1,914 4.6 $2,638 $2,231 -15.4 $1,830 $2,098 14.6
Missouri $3,024 $3,167 4.7 $4,054 $2,887 -28.8 $3,213 $4,077 26.9
Montana $646 $729 12.8 $1,058 $893 -15.6 $689 $842 22.2
Nebraska $1,294 $1,439 11.2 $1,780 $1,428 -19.8 $1,542 $1,898 23.1
Nevada $2,481 $2,577 3.9 $4,082 $3,587 -12.1 $1,255 $1,292 2.9
New Hampshire $957 $976 2.0 $758 $609 -19.7 $547 $625 14.3
New Jersey $8,870 $9,199 3.7 $15,024 $13,611 -9.4 $6,812 $6,145 -9.8
New Mexico $1,858 $1,749 -5.9 $2,172 $1,745 -19.7 $1,881 $1,726 -8.2
New York $24,617 $25,970 5.5 $26,062 $15,644 -40.0 $20,406 $27,584 35.2
North Carolina $6,732 $6,925 2.9 $9,083 $7,338 -19.2 $6,895 $8,470 22.8
North Dakota $1,057 $1,199 13.4 $1,336 $663 -50.4 $1,269 $969 -23.6
Ohio $7,097 $7,515 5.9 $8,615 $7,386 -14.3 $7,710 $8,522 10.5
Oklahoma $2,402 $2,364 -1.6 $3,113 $2,399 -22.9 $2,663 $2,846 6.9
Oregon $2,588 $2,378 -8.1 $4,336 $3,075 -29.1 $3,381 $4,335 28.2
Pennsylvania $11,311 $11,541 2.0 $11,703 $8,184 -30.1 $9,860 $11,850 20.2
Rhode Island $777 $841 8.2 $1,113 $818 -26.5 $1,038 $1,094 5.4
South Carolina $2,052 $2,247 9.5 $3,500 $2,799 -20.0 $3,276 $3,751 14.5
South Dakota $466 $494 6.0 $477 $481 0.8 $526 $445 -15.4
Tennessee $3,831 $4,279 11.7 $5,124 $4,236 -17.3 $4,191 $4,938 17.8
Texas $15,217 $15,718 3.3 $18,320 $12,278 -33.0 $15,842 $17,848 12.7
Utah $2,084 $2,286 9.7 $3,263 $2,186 -33.0 $2,188 $1,971 -9.9
Vermont $542 $631 16.4 $1,705 $1,539 -9.7 $588 $792 34.7
Virginia $5,658 $5,905 4.4 $7,274 $5,364 -26.3 $5,977 $7,355 23.1
Washington $7,553 $8,254 9.3 $8,641 $4,354 -49.6 $7,996 $7,797 -2.5
West Virginia $1,328 $1,370 3.2 $1,774 $1,327 -25.2 $1,492 $1,551 4.0
Wisconsin $3,926 $4,140 5.5 $7,551 $5,807 -23.1 $3,719 $3,997 7.5
Wyoming $495 $446 -9.9 $777 $629 -19.0 $355 $406 14.4
U.S. Total $258,320 $267,969 3.7 $337,742 $240,417 -28.8 $256,467 $306,667 19.6
Table 3
Year-over-year (YOY) percent change in total tax collections year-to-date (in millions, 2019/2020)
State Q1-Q3 2019 Q1-Q3 2020 Percent change (YOY)
Alabama $9,045 $9,449 4.5
Alaska $1,191 $884 -25.8
Arizona $13,672 $13,336 -2.5
Arkansas $7,601 $8,304 9.2
California $155,211 $149,686 -3.6
Colorado $11,830 $11,737 -0.8
Connecticut $14,879 $11,103 -25.4
Delaware $3,795 $3,794 0.0
District of Columbia $7,386 $7,055 -4.5
Florida $35,296 $32,454 -8.1
Georgia $17,969 $18,265 1.6
Hawaii $6,474 $5,241 -19.0
Idaho $3,837 $4,305 12.2
Illinois $35,344 $37,091 4.9
Indiana $16,504 $16,401 -0.6
Iowa $8,129 $7,974 -1.9
Kansas $7,989 $7,952 -0.5
Kentucky $9,581 $9,624 0.4
Louisiana $9,348 $9,171 -1.9
Maine $3,601 $3,643 1.2
Maryland $18,925 $17,163 -9.3
Massachusetts $24,873 $21,737 -12.6
Michigan $22,213 $19,637 -11.6
Minnesota $22,052 $21,125 -4.2
Mississippi $6,298 $6,243 -0.9
Missouri $10,291 $10,131 -1.6
Montana $2,393 $2,464 3.0
Nebraska $4,616 $4,765 3.2
Nevada $7,818 $7,456 -4.6
New Hampshire $2,262 $2,210 -2.3
New Jersey $30,706 $28,955 -5.7
New Mexico $5,911 $5,220 -11.7
New York $71,085 $69,198 -2.7
North Carolina $22,710 $22,733 0.1
North Dakota $3,662 $2,831 -22.7
Ohio $23,422 $23,423 0.0
Oklahoma $8,178 $7,609 -7.0
Oregon $10,305 $9,788 -5.0
Pennsylvania $32,874 $31,575 -4.0
Rhode Island $2,928 $2,753 -6.0
South Carolina $8,828 $8,797 -0.4
South Dakota $1,469 $1,420 -3.3
Tennessee $13,146 $13,453 2.3
Texas $49,379 $45,844 -7.2
Utah $7,535 $6,443 -14.5
Vermont $2,835 $2,962 4.5
Virginia $18,909 $18,624 -1.5
Washington $24,190 $20,405 -15.6
West Virginia $4,594 $4,248 -7.5
Wisconsin $15,196 $13,944 -8.2
Wyoming $1,627 $1,481 -9.0
U.S. Total $852,529 $815,053 -4.4

Total Tax Collections

The second and third quarters of 2020, in particular, saw widespread volatility in total tax collections due to the impact of pandemic-related business and movement restrictions in the second quarter of 2020, and the extension of the federal income tax filing deadline, from April 15 to July 15, which many states followed.6

Florida saw the sharpest decline in year-over-year total revenues – slightly more than 8 percent – but was followed closely by West Virginia, Virginia and Texas – at 7.5 percent, 7.2 percent and 7 percent, respectively. However, overall, the SLC region fared well, as Florida's drop in tax collections only landed it 13th for total year-over-year decline in tax revenues among all U.S. states and the District of Columbia. The South also includes the state with the second-largest year-over-year percent increase in tax revenues: Arkansas, which realized a 9.2 percent increase over 2019. The state was able to land in a strong fiscal position due to better than expected sales tax revenue from retail and automotive sales, a reduction in income tax refunds due to the filing extension, income tax revenue received before the extended filing deadline, and corporate income tax revenues exceeding the fiscal year forecast.7

Nationally, Idaho had the highest year-over-year change in tax collections – 12.2 percent – due to record high growth in its gross domestic product before the onset of the pandemic, lower-than-average unemployment figures, the fastest rebound in employment numbers in the nation, and the availability of outdoor business alternatives to counteract public health restrictions on indoor gatherings.8,9 Overall, the South performed well, with three other states – Alabama, Tennessee and Georgia – joining Arkansas in the top 10 in the nation for year-over-year total tax revenue percentage increases.


Table 4
Year-over-year (YOY) percent change in general sales and gross receipts tax collections per financial quarter (in millions, Q1-Q3 2019/2020)
State Q1 2019 Q1 2020 Percent change (YOY) Q2 2019 Q2 2020 Percent change (YOY) Q3 2019 Q3 2020 Percent change (YOY)
Alabama $763 $835 9.4 $851 $865 1.6 $820 $926 12.9
Alaska $0 $0 n/a $0 $0 n/a $0 $0 n/a
Arizona $1,843 $2,045 11.0 $2,024 $1,876 -7.3 $1,887 $2,096 11.1
Arkansas $863 $909 5.3 $900 $911 1.2 $924 $1,065 15.3
California $11,600 $11,213 -3.3 $9,013 $8,951 -0.7 $12,088 $10,306 -14.7
Colorado $819 $858 4.8 $838 $752 -10.3 $919 $911 -0.9
Connecticut $1,043 $1,159 11.1 $1,664 $1,009 -39.4 $709 $778 9.7
Delaware $0 $0 n/a $0 $0 n/a $0 $0 n/a
District of Columbia $339 $392 15.6 $427 $222 -48.0 $415 $263 -36.6
Florida $7,197 $7,552 4.9 $7,558 $5,697 -24.6 $6,811 $6,569 -3.6
Georgia $1,546 $1,553 0.5 $1,611 $1,460 -9.4 $1,579 $1,499 -5.1
Hawaii $986 $1,042 5.7 $963 $751 -22.0 $994 $510 -48.7
Idaho $441 $502 13.8 $482 $517 7.3 $557 $623 11.8
Illinois $2,712 $2,864 5.6 $3,036 $2,559 -15.7 $3,184 $3,252 2.1
Indiana $1,966 $2,104 7.0 $2,061 $1,917 -7.0 $2,142 $2,216 3.5
Iowa $822 $888 8.0 $1,159 $1,108 -4.4 $653 $666 2.0
Kansas $793 $844 6.4 $859 $821 -4.4 $870 $921 5.9
Kentucky $928 $999 7.7 $1,046 $984 -5.9 $1,053 $1,127 7.0
Louisiana $949 $955 0.6 $998 $866 -13.2 $946 $980 3.6
Maine $351 $381 8.5 $385 $353 -8.3 $503 $497 -1.2
Maryland $1,158 $1,248 7.8 $1,699 $1,509 -11.2 $852 $870 2.1
Massachusetts $1,636 $1,738 6.2 $1,775 $1,488 -16.2 $1,800 $1,816 0.9
Michigan $1,947 $1,524 -21.7 $2,196 $1,950 -11.2 $3,256 $3,437 5.6
Minnesota $1,429 $1,505 5.3 $1,821 $1,765 -3.1 $1,525 $1,419 -7.0
Mississippi $881 $916 4.0 $1,080 $1,068 -1.1 $810 $907 12.0
Missouri $950 $966 1.7 $940 $906 -3.6 $984 $1,011 2.7
Montana $0 $0 n/a $0 $0 n/a $0 $0 n/a
Nebraska $484 $572 18.2 $501 $504 0.6 $561 $621 10.7
Nevada $1,346 $1,452 7.9 $2,385 $2,206 -7.5 $853 $884 3.6
New Hampshire $0 $0 n/a $0 $0 n/a $0 $0 n/a
New Jersey $2,444 $2,461 0.7 $4,391 $4,320 -1.6 $1,703 $1,739 2.1
New Mexico $714 $776 8.7 $760 $723 -4.9 $798 $714 -10.5
New York $3,652 $3,793 3.9 $3,953 $3,216 -18.6 $4,128 $3,796 -8.0
North Carolina $2,009 $2,038 1.4 $2,233 $1,970 -11.8 $2,253 $2,426 7.7
North Dakota $238 $250 5.0 $247 $218 -11.7 $320 $316 -1.3
Ohio $3,002 $3,163 5.4 $3,356 $3,048 -9.2 $3,271 $3,450 5.5
Oklahoma $740 $712 -3.8 $768 $716 -6.8 $773 $745 -3.6
Oregon $0 $0 n/a $0 $0 n/a $0 $0 n/a
Pennsylvania $2,749 $2,918 6.1 $3,057 $2,438 -20.2 $3,138 $3,465 10.4
Rhode Island $255 $287 12.5 $288 $255 -11.5 $318 $339 6.6
South Carolina $820 $874 6.6 $938 $853 -9.1 $934 $967 3.5
South Dakota $266 $288 8.3 $271 $279 3.0 $327 $243 -25.7
Tennessee $2,340 $2,514 7.4 $2,436 $2,270 -6.8 $2,473 $2,570 3.9
Texas $8,463 $8,669 2.4 $12,683 $8,964 -29.3 $8,884 $11,744 32.2
Utah $663 $772 16.4 $730 $690 -5.5 $769 $802 4.3
Vermont $106 $112 5.7 $100 $99 -1.0 $111 $124 11.7
Virginia $1,099 $1,199 9.1 $1,306 $1,160 -11.2 $1,015 $1,052 3.6
Washington $3,985 $4,207 5.6 $5,648 $2,197 -61.1 $4,498 $4,320 -4.0
West Virginia $342 $354 3.5 $382 $362 -5.2 $353 $351 -0.6
Wisconsin $1,297 $1,377 6.2 $2,011 $1,786 -11.2 $1,028 $1,024 -0.4
Wyoming $190 $183 -3.7 $181 $159 -12.2 $220 $277 25.9
U.S. Total $80,824 $83,569 3.4 $93,584 $78,517 -16.1 $84,594 $86,369 2.1
Table 5
Year-over-year (YOY) percent change in general sales and gross receipts tax collections year-to-date (in millions, 2019/2020)
State Q1-Q3 2019 Q1-Q3 2020 Percent change (YOY)
Alabama $2,434 $2,626 7.9
Alaska $0 $0 n/a
Arizona $5,754 $6,017 4.6
Arkansas $2,687 $2,885 7.4
California $32,701 $30,470 -6.8
Colorado $2,576 $2,521 -2.1
Connecticut $3,416 $2,946 -13.8
Delaware $0 $0 n/a
District of Columbia $1,181 $877 -25.7
Florida $21,566 $19,818 -8.1
Georgia $4,736 $4,512 -4.7
Hawaii $2,943 $2,303 -21.7
Idaho $1,480 $1,642 10.9
Illinois $8,932 $8,675 -2.9
Indiana $6,169 $6,237 1.1
Iowa $2,634 $2,662 1.1
Kansas $2,522 $2,586 2.5
Kentucky $3,027 $3,110 2.7
Louisiana $2,893 $2,801 -3.2
Maine $1,239 $1,231 -0.6
Maryland $3,709 $3,627 -2.2
Massachusetts $5,211 $5,042 -3.2
Michigan $7,399 $6,911 -6.6
Minnesota $4,775 $4,689 -1.8
Mississippi $2,771 $2,891 4.3
Missouri $2,874 $2,883 0.3
Montana $0 $0 n/a
Nebraska $1,546 $1,697 9.8
Nevada $4,584 $4,542 -0.9
New Hampshire $0 $0 n/a
New Jersey $8,538 $8,520 -0.2
New Mexico $2,272 $2,213 -2.6
New York $11,733 $10,805 -7.9
North Carolina $6,495 $6,434 -0.9
North Dakota $805 $784 -2.6
Ohio $9,629 $9,661 0.3
Oklahoma $2,281 $2,173 -4.7
Oregon $0 $0 n/a
Pennsylvania $8,944 $8,821 -1.4
Rhode Island $861 $881 2.3
South Carolina $2,692 $2,694 0.1
South Dakota $864 $810 -6.3
Tennessee $7,249 $7,354 1.4
Texas $30,030 $29,377 -2.2
Utah $2,162 $2,264 4.7
Vermont $317 $335 5.7
Virginia $3,420 $3,411 -0.3
Washington $14,131 $10,724 -24.1
West Virginia $1,077 $1,067 -0.9
Wisconsin $4,336 $4,187 -3.4
Wyoming $591 $619 4.7
U.S. Total $259,002 $248,455 -4.1

General Sales and Gross Receipts Tax Collections

Comparatively, Florida saw the fifth largest year-over-year decline in general sales tax revenue for the first three quarters of 2019 and 2020 – surpassed only by Washington D.C., Washington, Hawaii and Connecticut. According to the Florida Office of Economic and Demographic Research, in the second quarter of 2020, the state experienced a decline in sales tax revenue of more than $1.6 billion versus the pre-pandemic projection for the quarter. This second quarter decline in general sales tax revenue against projections represented 84.7 percent of the state's entire annual revenue loss for fiscal year 2020.10 There was a slight recovery of collections during the summer as restrictions were lessened but, during the midyear budget conference, state economists informed lawmakers to expect a nearly $2 billion shortfall in fiscal year 2022.11

Of note, Florida and Missouri are the only sales-tax collecting states in the nation that do not allow the taxing of online commerce.12 In Florida, state economists have projected a combined annual state and local revenue boost of more than $620 million, contingent upon the state implementing a proposed online sales tax collection bill.13 Similarly, fiscal analysts have estimated Missouri could collect an additional $95 million and $85 million in state and local revenue per year, respectively, by implementing online sales tax legislation.14 However, the inability to collect online sales tax does not appear to have negatively impacted Missouri's collections, as it is placed firmly in the median (ninth) of SLC states for percent change in general sales and gross receipts.


Table 6
Year-over-year (YOY) percent change in individual income tax collections per financial quarter (in millions, Q1-Q3 2019/2020)
State Q1 2019 Q1 2020 Percent change (YOY) Q2 2019 Q2 2020 Percent change (YOY) Q3 2019 Q3 2020 Percent change (YOY)
Alabama $1,034 $1,138 10.1 $1,232 $845 -31.4 $999 $1,287 28.8
Alaska $0 $0 n/a $0 $0 n/a $0 $0 n/a
Arizona $1,150 $741 -35.6 $1,807 $1,139 -37.0 $1,361 $1,927 41.6
Arkansas $619 $656 6.0 $960 $741 -22.8 $774 $1,412 82.4
California $24,746 $27,256 10.1 $37,548 $16,332 -56.5 $20,794 $39,843 91.6
Colorado $1,726 $1,880 8.9 $2,783 $1,833 -34.1 $1,949 $3,095 58.8
Connecticut $2,032 $1,944 -4.3 $3,482 $1,605 -53.9 $1,114 $1,213 8.9
Delaware $461 $501 8.7 $552 $408 -26.1 $399 $550 37.8
District of Columbia $539 $590 9.5 $751 $518 -31.0 $561 $768 36.9
Florida $0 $0 n/a $0 $0 n/a $0 $0 n/a
Georgia $2,541 $2,866 12.8 $3,515 $2,747 -21.8 $2,980 $4,097 37.5
Hawaii $524 $560 6.9 $888 $697 -21.5 $659 $651 -1.2
Idaho $272 $376 38.2 $716 $801 11.9 $358 $483 34.9
Illinois $4,813 $5,096 5.9 $6,045 $4,597 -24.0 $4,199 $5,389 28.3
Indiana $1,886 $2,011 6.6 $2,959 $2,125 -28.2 $1,436 $2,169 51.0
Iowa $1,012 $946 -6.5 $1,282 $1,204 -6.1 $725 $785 8.3
Kansas $721 $851 18.0 $1,488 $862 -42.1 $831 $1,249 50.3
Kentucky $1,005 $1,128 12.2 $1,355 $1,410 4.1 $1,134 $1,185 4.5
Louisiana $720 $845 17.4 $1,133 $773 -31.8 $1,039 $1,413 36.0
Maine $293 $311 6.1 $587 $658 12.1 $446 $433 -2.9
Maryland $2,447 $2,728 11.5 $3,824 $2,636 -31.1 $1,992 $1,991 -0.1
Massachusetts $3,682 $3,817 3.7 $6,088 $3,563 -41.5 $3,950 $4,016 1.7
Michigan $2,227 $1,374 -38.3 $2,600 $2,326 -10.5 $2,760 $2,651 -3.9
Minnesota $2,601 $2,488 -4.3 $4,397 $2,725 -38.0 $3,066 $4,231 38.0
Mississippi $362 $399 10.2 $670 $498 -25.7 $458 $557 21.6
Missouri $1,455 $1,556 6.9 $2,257 $1,329 -41.1 $1,494 $2,244 50.2
Montana $295 $313 6.1 $497 $331 -33.4 $355 $518 45.9
Nebraska $507 $551 8.7 $888 $651 -26.7 $655 $930 42.0
Nevada $0 $0 n/a $0 $0 n/a $0 $0 n/a
New Hampshire $20 $22 10.0 $69 $65 -5.8 $20 $38 90.0
New Jersey $3,781 $4,129 9.2 $6,163 $5,294 -14.1 $2,682 $2,385 -11.1
New Mexico $436 $120 -72.5 $460 $405 -12.0 $425 $397 -6.6
New York $15,557 $16,342 5.0 $16,910 $8,228 -51.3 $11,072 $18,225 64.6
North Carolina $3,098 $3,164 2.1 $4,264 $3,302 -22.6 $3,004 $3,991 32.9
North Dakota $101 $107 5.9 $150 $95 -36.7 $100 $140 40.0
Ohio $1,796 $1,680 -6.5 $2,942 $1,960 -33.4 $2,387 $3,028 26.9
Oklahoma $742 $721 -2.8 $1,147 $856 -25.4 $882 $1,093 23.9
Oregon $1,907 $1,599 -16.2 $3,116 $2,148 -31.1 $2,460 $3,346 36.0
Pennsylvania $3,274 $3,337 1.9 $4,529 $2,963 -34.6 $3,096 $4,402 42.2
Rhode Island $255 $266 4.3 $453 $282 -37.7 $347 $368 6.1
South Carolina $666 $646 -3.0 $1,611 $1,266 -21.4 $1,534 $1,882 22.7
South Dakota $0 $0 n/a $0 $0 n/a $0 $0 n/a
Tennessee $15 $9 -40.0 $180 $36 -80.0 $5 $97 1840.0
Texas $0 $0 n/a $0 $0 n/a $0 $0 n/a
Utah $1,061 $1,089 2.6 $1,923 $1,094 -43.1 $971 $766 -21.1
Vermont $163 $184 12.9 $317 $176 -44.5 $205 $415 102.4
Virginia $3,469 $3,544 2.2 $4,229 $2,916 -31.0 $3,550 $4,828 36.0
Washington $0 $0 n/a $0 $0 n/a $0 $0 n/a
West Virginia $458 $476 3.9 $702 $513 -26.9 $504 $614 21.8
Wisconsin $1,423 $1,517 6.6 $3,526 $2,431 -31.1 $1,663 $1,746 5.0
Wyoming $0 $0 n/a $0 $0 n/a $0 $0 n/a
U.S. Total $97,351 $101,285 4.0 $142,242 $86,866 -38.9 $90,833 $132,080 45.4
Table 7
Year-over-year (YOY) percent change in individual income tax collections year-to-date (in millions, 2019/2020)
State Q1-Q3 2019 Q1-Q3 2020 Percent change (YOY)
Alabama $3,265 $3,270 0.2
Alaska $0 $0 n/a
Arizona $4,318 $3,807 -11.8
Arkansas $2,353 $2,809 19.4
California $83,088 $83,431 0.4
Colorado $6,458 $6,808 5.4
Connecticut $6,628 $4,762 -28.2
Delaware $1,412 $1,459 3.3
District of Columbia $1,851 $1,876 1.4
Florida $0 $0 n/a
Georgia $9,036 $9,710 7.5
Hawaii $2,071 $1,908 -7.9
Idaho $1,346 $1,660 23.3
Illinois $15,057 $15,082 0.2
Indiana $6,281 $6,305 0.4
Iowa $3,019 $2,935 -2.8
Kansas $3,040 $2,962 -2.6
Kentucky $3,494 $3,723 6.6
Louisiana $2,892 $3,031 4.8
Maine $1,326 $1,402 5.7
Maryland $8,263 $7,355 -11.0
Massachusetts $13,720 $11,396 -16.9
Michigan $7,587 $6,351 -16.3
Minnesota $10,064 $9,444 -6.2
Mississippi $1,490 $1,454 -2.4
Missouri $5,206 $5,129 -1.5
Montana $1,147 $1,162 1.3
Nebraska $2,050 $2,132 4.0
Nevada $0 $0 n/a
New Hampshire $109 $125 14.7
New Jersey $12,626 $11,808 -6.5
New Mexico $1,321 $922 -30.2
New York $43,539 $42,795 -1.7
North Carolina $10,366 $10,457 0.9
North Dakota $351 $342 -2.6
Ohio $7,125 $6,668 -6.4
Oklahoma $2,771 $2,670 -3.6
Oregon $7,483 $7,093 -5.2
Pennsylvania $10,899 $10,702 -1.8
Rhode Island $1,055 $916 -13.2
South Carolina $3,811 $3,794 -0.4
South Dakota $0 $0 n/a
Tennessee $200 $142 -29.0
Texas $0 $0 n/a
Utah $3,955 $2,949 -25.4
Vermont $685 $775 13.1
Virginia $11,248 $11,288 0.4
Washington $0 $0 n/a
West Virginia $1,664 $1,603 -3.7
Wisconsin $6,612 $5,694 -13.9
Wyoming $0 $0 n/a
U.S. Total $330,426 $320,231 -3.1

Individual Income Tax Collections

Most states encountered dramatic swings in individual state income tax collections from the second to the third quarter of 2020, primarily due to the extension of the federal income tax deadline from April 15 to July 15, which most states followed. In the South, only Mississippi and Virginia did not move their filing deadlines to July; rather, they extended their deadlines to May 15 and June 1, respectively.15

Of note, three SLC states – Florida, Tennessee and Texas – do not levy an individual income tax. However, prior to the signing of Senate Bill 47 in 2016, Tennessee collected a 6 percent tax on individual earned interest income from bonds, dividends and stocks. The tax was reduced to 5 percent upon its signing and then by a further 1 percent annually, until phasing out completely effective January 1, 2021.16 This gradual phasing out, during a five-year period, helps to explain the steady year-over-year decline in the state's individual income tax revenues; while the delaying of the tax filing deadline for interest and dividend income to July led to unusual quarter-to-quarter changes.17,18


Table 8
Year-over-year (YOY) percent change in motor fuels sales tax collections per financial quarter (in millions, Q1-Q3 2019/2020)
State Q1 2019 Q1 2020 Percent change (YOY) Q2 2019 Q2 2020 Percent change (YOY) Q3 2019 Q3 2020 Percent change (YOY)
Alabama $152 $201 32.2 $168 $186 10.7 $171 $215 25.7%
Alaska $8 $8 0.0 $9 $10 11.1 $19 $15 -21.1%
Arizona $233 $241 3.4 $435 $360 -17.2 $241 $221 -8.3%
Arkansas $117 $139 18.8 $127 $130 2.4 $130 $119 -8.5%
California $1,882 $2,030 7.9 $1,860 $1,466 -21.2 $2,100 $1,937 -7.8%
Colorado $159 $162 1.9 $162 $143 -11.7 $194 $172 -11.3%
Connecticut $115 $120 4.3 $168 $95 -43.5 $90 $85 -5.6%
Delaware $33 $35 6.1 $44 $33 -25.0 $33 $28 -15.2%
District of Columbia $7 $6 -14.3 $2 $4 100.0 $3 $6 100.0%
Florida $977 $1,012 3.6 $1,061 $810 -23.7 $1,018 $914 -10.2%
Georgia $435 $456 4.8 $482 $492 2.1 $469 $464 -1.1%
Hawaii $21 $21 0.0 $22 $15 -31.8 $23 $17 -26.1%
Idaho $83 $85 2.4 $87 $80 -8.0 $106 $110 3.8%
Illinois $319 $611 91.5 $333 $494 48.3 $305 $604 98.0%
Indiana $334 $348 4.2 $357 $296 -17.1 $380 $348 -8.4%
Iowa $129 $158 22.5 $255 $213 -16.5 $119 $99 -16.8%
Kansas $108 $113 4.6 $119 $99 -16.8 $124 $110 -11.3%
Kentucky $180 $183 1.7 $198 $160 -19.2 $206 $192 -6.8%
Louisiana $164 $113 -31.1 $167 $130 -22.2 $160 $146 -8.8%
Maine $60 $58 -3.3 $61 $48 -21.3 $73 $63 -13.7%
Maryland $241 $270 12.0 $433 $358 -17.3 $191 $173 -9.4%
Massachusetts $183 $182 -0.5 $193 $131 -32.1 $202 $169 -16.3%
Michigan $351 $213 -39.3 $361 $247 -31.6 $389 $367 -5.7%
Minnesota $218 $213 -2.3 $227 $175 -22.9 $258 $225 -12.8%
Mississippi $102 $105 2.9 $117 $97 -17.1 $115 $116 0.9%
Missouri $169 $176 4.1 $176 $155 -11.9 $191 $175 -8.4%
Montana $58 $60 3.4 $56 $50 -10.7 $76 $72 -5.3%
Nebraska $89 $93 4.5 $102 $87 -14.7 $109 $110 0.9%
Nevada $85 $61 -28.2 $148 $153 3.4 $1 $1 0.0%
New Hampshire $44 $44 0.0 $50 $35 -30.0 $44 $40 -9.1%
New Jersey $119 $115 -3.4 $189 $167 -11.6 $86 $71 -17.4%
New Mexico $64 $66 3.1 $107 $88 -17.8 $26 $24 -7.7%
New York $411 $381 -7.3 $441 $278 -37.0 $433 $398 -8.1%
North Carolina $486 $504 3.7 $563 $364 -35.3 $540 $596 10.4%
North Dakota $45 $48 6.7 $48 $41 -14.6 $54 $45 -16.7%
Ohio $463 $671 44.9 $490 $572 16.7 $553 $624 12.8%
Oklahoma $138 $137 -0.7 $138 $122 -11.6 $152 $141 -7.2%
Oregon $130 $135 3.8 $206 $170 -17.5 $210 $193 -8.1%
Pennsylvania $785 $784 -0.1 $846 $620 -26.7 $903 $793 -12.2%
Rhode Island $22 $23 4.5 $25 $25 0.0 $26 $24 -7.7%
South Carolina $187 $193 3.2 $195 $172 -11.8 $207 $169 -18.4%
South Dakota $41 $45 9.8 $43 $39 -9.3 $53 $50 -5.7%
Tennessee $268 $290 8.2 $305 $266 -12.8 $318 $309 -2.8%
Texas $891 $903 1.3 $967 $755 -21.9 $965 $886 -8.2%
Utah $125 $134 7.2 $159 $96 -39.6 $135 $124 -8.1%
Vermont $21 $29 38.1 $21 $24 14.3 $32 $28 -12.5%
Virginia $226 $224 -0.9 $310 $256 -17.4 $225 $207 -8.0%
Washington $382 $290 -24.1 $539 $285 -47.1 $458 $393 -14.2%
West Virginia $100 $103 3.0 $100 $83 -17.0 $126 $116 -7.9%
Wisconsin $252 $260 3.2 $347 $287 -17.3 $201 $196 -2.5%
Wyoming $30 $27 -10.0 $26 $25 -3.8 $32 $30 -6.3%
U.S. Total $12,236 $12,872 5.2 $14,046 $11,484 -18.2 $13,270 $12,722 -4.1%
Table 9
Year-over-year (YOY) percent change in motor fuels sales tax collections year-to-date (in millions, 2019/2020)
State Q1-Q3 2019 Q1-Q3 2020 Percent change (YOY)
Alabama $491 $602 22.6
Alaska $36 $33 -8.3
Arizona $909 $822 -9.6
Arkansas $374 $388 3.7
California $5,842 $5,433 -7.0
Colorado $515 $477 -7.4
Connecticut $373 $300 -19.6
Delaware $110 $96 -12.7
District of Columbia $12 $16 33.3
Florida $3,056 $2,736 -10.5
Georgia $1,386 $1,412 1.9
Hawaii $66 $53 -19.7
Idaho $276 $275 -0.4
Illinois $957 $1,709 78.6
Indiana $1,071 $992 -7.4
Iowa $503 $470 -6.6
Kansas $351 $322 -8.3
Kentucky $584 $535 -8.4
Louisiana $491 $389 -20.8
Maine $194 $169 -12.9
Maryland $865 $801 -7.4
Massachusetts $578 $482 -16.6
Michigan $1,101 $827 -24.9
Minnesota $703 $613 -12.8
Mississippi $334 $318 -4.8
Missouri $536 $506 -5.6
Montana $190 $182 -4.2
Nebraska $300 $290 -3.3
Nevada $234 $215 -8.1
New Hampshire $138 $119 -13.8
New Jersey $394 $353 -10.4
New Mexico $197 $178 -9.6
New York $1,285 $1,057 -17.7
North Carolina $1,589 $1,464 -7.9
North Dakota $147 $134 -8.8
Ohio $1,506 $1,867 24.0
Oklahoma $428 $400 -6.5
Oregon $546 $498 -8.8
Pennsylvania $2,534 $2,197 -13.3
Rhode Island $73 $72 -1.4
South Carolina $589 $534 -9.3
South Dakota $137 $134 -2.2
Tennessee $891 $865 -2.9
Texas $2,823 $2,544 -9.9
Utah $419 $354 -15.5
Vermont $74 $81 9.5
Virginia $761 $687 -9.7
Washington $1,379 $968 -29.8
West Virginia $326 $302 -7.4
Wisconsin $800 $743 -7.1
Wyoming $88 $82 -6.8
U.S. Total $39,552 $37,078 -6.3

Motor Fuels Sales Tax Collections

According to the National Governors Association, despite slight increases in July and around the winter holidays, passenger vehicle miles traveled remained well below the previous year baseline in 2020, which has greatly impacted state motor fuel collections.19 Alabama, unique among SLC member states, saw a 22.6 percent increase in motor fuel tax collections during the first three quarters of 2020 compared to 2019. A 2019 piece of legislation, the Rebuild Alabama Act, increased the state gas tax by 10 cents per gallon and added a phased adjustment to link it to the National Highway Construct Cost index during a three-year period.20 Louisiana, on the other hand, realized a 20.8 percent drop in the first to third quarter 2020 collections compared to the same period in 2019, primarily due to diminished motor vehicle use.21 A notable outlier, Illinois realized a 98 percent increase in overall motor fuels tax collections, attributable to a 2019 legislative measure that doubled the base state motor fuel tax – from 19 cents to 38 cents per gallon – and included language to link the tax to inflation.22

Conclusion

With the rollout of vaccinations beginning in December 2020, and a projected economic rebound in the summer, the road to fiscal recovery by 2022 could be within reach.23 Some experts have suggested state revenues can recover by late 2021, if additional federal aid is made available.24 Incoming Secretary of the Treasury Janet Yellen has signaled the new administration's openness to providing additional direct support to state and local governments.25 Policymakers in the South – especially those in Arkansas, Alabama, Georgia, Kentucky, North Carolina and Tennessee – can be relieved that, despite the pandemic's devasting impact, year-to-date collections still increased, and several states managed to exceed their cautiously lowered projections. Upcoming data for the fourth quarter of 2020, as well as the first quarter of 2021, will further indicate if state revenues are on a trajectory for recovery.


References

1 Mark Zandi. "Economic View: This Week in the COVID-19 Crisis," Moody's Analytics, January 25, 2021. https://www.economy.com/economicview/analysis/382844/This-Week-in-the-COVID19-Crisis.

2 Kathryn White. "State Budget Basics During an Economic Downturn," National Association of State Budget Officers, May 6, 2020. http://budgetblog.nasbo.org/budgetblogs/blogs/kathryn-white/2020/05/06/state-budget-basics-during-an-economic-downturn.

3 "Quarterly Summary of State and Local Government Tax Revenue for Third Quarter 2020," U.S. Census Bureau, December 17, 2020. https://www.census.gov/library/publications/2020/econ/g20-qtax3.html.

4 "Quarterly Summary of State and Local Taxes," Census Bureau, accessed January 21, 2021. https://www.census.gov/econ/currentdata/clutch/getzippedfile?program=QTAX&filename=QTAX-mf.zip.

5 Michael Tilley. "Arkansas ends fiscal year 2020 with better-than-expected revenue of $369.4 million," Talk Business & Politics, July 2, 2020. https://talkbusiness.net/2020/07/arkansas-ends-fiscal-year-2020-with-better-than-expected-revenue-of-369-4-million/.

6 Josh Goodman and Mark Robyn. "When Will the Impact of Coronavirus Hit State Budgets?" The Pew Charitable Trusts, April 2, 2020. https://www.pewtrusts.org/en/research-and-analysis/articles/2020/04/02/when-will-the-impact-of-coronavirus-hit-state-budgets.

7 Michael Tilley. "Arkansas ends fiscal year 2020 with better-than-expected revenue of $369.4 million."

8 James Dawson. "Coronavirus Threatens State Budgets, But Idaho Is Positioned To Weather The Storm," Boise State Public Radio, April 23, 2020. https://www.boisestatepublicradio.org/post/coronavirus-threatens-state-budgets-idaho-positioned-weather-storm#stream/0.

9 Ryan Suppe. "Idaho's economic recovery among nation's best, but 2021 remains uncertain," Idaho Press, January 23, 2021. https://www.idahopress.com/news/local/idahos-economic-recovery-among-nations-best-but-2021-remains-uncertain/article_4548d3b3-6d16-520b-ba90-4d17ba5c2bcc.html.

10 "Monthly Revenue Report, Revised General Revenue Collections for June 2020," Florida Office of Economic and Demographic Research, June 2020. http://edr.state.fl.us/content/revenues/reports/monthly-revenue-report/newsletters/nljun20.pdf.

11 Renzo Downey. "Despite strong summer, senators prepare for frugal budget," Florida Politics, January 14, 2021. https://floridapolitics.com/archives/395319-despite-strong-summer-senators-prepare-for-frugal-budget.

12 Alan Greenblatt. "The Supreme Court Decision That Saved States Billions," Governing, January 22, 2021. https://www.governing.com/finance/The-Supreme-Court-Decision-That-Saved-States-Billions.html.

13 Jacob Ogles. "Senate committee advances Joe Gruters' bill requiring online sales tax," Florida Politics, January 25, 2021. https://floridapolitics.com/archives/398080-senate-commerce-committee-advances-joe-gruters-bill-requiring-online-sales-tax.

14 Madison McVan. "Online sales tax legislation dead for another year," Missourian, May 15, 2020. https://www.columbiamissourian.com/news/state_news/online-sales-tax-legislation-dead-for-another-year/article_a985bf12-9546-11ea-8d71-bfe516000940.html.

15 Katherine Loughead et al. "Tracking State Legislative Responses to COVID-19," Tax Foundation, April 30, 2020. https://taxfoundation.org/state-tax-coronavirus-covid19/.

16 Dave Flessner. "Tennesseans pay second-lowest share of income in state and local taxes of any state," Chattanooga Times Free Press, December 28, 2020. https://www.timesfreepress.com/news/business/aroundregion/story/2020/dec/28/tennesseans-pay-second-lowest-share-income-st/538663/.

17 Tennessee Senate Bill 47 (2016). http://wapp.capitol.tn.gov/apps/BillInfo/default.aspx?BillNumber=SB0047&GA=109.

18 "July Revenues," Tennessee Department of Finance and Administration, August 13, 2020. https://www.tn.gov/finance/news/2020/8/13/july-revenues-.html.

19 "Transportation Funding and Financing During COVID-19," National Governors Association, December 7, 2020. https://www.nga.org/memos/transportation-funding-financing-covid-19/.

20 Ibid.

21 "Fiscal Highlights, Fiscal Year 2020-2021," Louisiana Legislative Fiscal Office, September 2020. http://lfo.louisiana.gov/files/publications/FY%2021%20Fiscal%20Highlights.pdf.

22 "Transportation Funding and Financing During COVID-19," NGA.

23 Michael E. Kanell. "Atlanta Fed chief sees economic rebound with vaccine in summer," Atlanta Journal Constitution, January 12, 2021. https://www.ajc.com/ajcjobs/atlanta-fed-chief-sees-economic-rebound-with-vaccine-in-summer/IWPVDIJD4VCCLM6S5E5ENWLIVE/.

24 Amanda Albright. "States May Not See Revenue Recover Until Late 2021, Moody's Says," Bloomberg, December 1, 2020. https://www.bloomberg.com/news/articles/2020-12-01/states-may-not-see-revenue-recover-until-late-2021-moody-s-says.

25 Andrea Noble. "Treasury Nominee Voices Support for State and Local Relief Funding," Route Fifty, January 19, 2021. https://www.route-fifty.com/finance/2021/01/treasury-nominee-backs-state-local-covid-19-relief-funding/171483/.