State revenue forecast shows volatile corporate tax collections and growing personal income taxes

Louisiana's revenue forecasting took center stage during a recent meeting of the House Revenue Estimating Conference on May 21, 2025, as officials discussed significant fluctuations in tax collections and their implications for the state budget.

The meeting revealed a mixed picture of state revenue, with personal income tax collections showing a promising growth of 5.5% this year, projected to rise further to 14-15% next year due to recent rate increases. Meanwhile, general sales tax collections have also improved, with a notable increase from 0.7% growth in December to 5.5% by April. Motor vehicle sales tax collections followed a similar trend, indicating a positive trajectory for these revenue sources.

However, the corporate income tax remains a point of concern due to its historical volatility. Officials noted that corporate tax collections have been the most unpredictable revenue source, significantly influenced by corporate profits and the ability of companies to manipulate their tax positions. Despite a forecast suggesting collections could exceed $600 million, there is a cautious outlook due to the inherent uncertainties tied to corporate tax revenues.

The conference also addressed the impact of recent legislative changes, including the elimination of the franchise tax, which adds another layer of unpredictability to future revenue projections. Officials emphasized the need for caution in budgeting, acknowledging that while current forecasts appear reasonable, substantial risks remain as the state adapts to these tax reforms.

As Louisiana moves forward, the discussions from this meeting underscore the importance of closely monitoring tax collections and adjusting forecasts as necessary to ensure fiscal stability in the face of ongoing economic fluctuations. The next steps will involve further analysis and potential adjustments to the revenue estimates as new data becomes available.