May was a great month for state tax collections, with sales and income tax revenue coming in above estimates. Ohio has a budget surplus for the year of around $800 million, and that’s more than 3% better than forecasts as the budget process comes closer to an end.
Preliminary numbers for May show overall, tax collections were up 9.8% over estimates. The state has collected $26.4 billion over the fiscal year, which is just over $800 million above estimates.
In April, personal income tax collections were down 8.5%, though that month is usually strong because of the annual tax deadline on April 15. But that revenue came roaring back in May. State money from personal income tax revenue was up 30.3%, and is up 5.7% for the fiscal year.
"The income tax overage that we saw in May did reflect a bump that we were expecting in non-withholding categories," said Office of Budget and Management director Kim Murnieks. "A lot of that reflects overages given the strong stock market returns that we saw back in tax year '24. We had been expecting to see this bump."
The state has taken in $9.3 billion in personal income tax so far this fiscal year.
Auto sales tax revenue was up 15.3% for May, but 4% over the fiscal year. In April, revenue from vehicle sales was 14% higher than estimates. Murnieks said she thinks the auto tax revenue boosts for both those months are related to tariffs that President Trump put into place on April 3.
"We do still believe that that is an impact of people making purchasing decisions and changing the timing of purchases, especially things like vehicles, in response to that tariff uncertainty," Murnieks said, noting that revenue numbers often reflect sales that happened in the previous month. "The data that we're seeing, both new and used vehicle transactions, were above norm for both for those months, and we're seeing that continue. It could still be a timing difference—timing meaning, timing of when people are deciding to make purchases. And it may not be that that will be sustained."
Non-auto sales tax revenue was up 3.6% for May, and up 6.1% over the fiscal year.
OBM's analysis of April's revenue numbers said the state's main business tax, the commercial activity tax, would come in higher in May, since the CAT is paid quarterly. But the result was the opposite; April's CAT totals were 105.9% higher than estimates, while May's CAT revenue was 15.6% below forecasts. The current state budget expanded the exemption for businesses that pay the CAT. But as of May those with revenue under $6 million—which includes most businesses in Ohio—no longer pay it.
OBM is preparing its analysis and projections to present to the committee that will work out differences between the House and Senate budgets later this month.
"We are constitutionally required to have a balanced budget here in the state of Ohio. And so we will look at both where we expect fiscal year '25 to land over the course of the upcoming weeks as we move forward to, to June 30 and close this year. And we will be looking at the economic projections for '26 and '27 to update our revenue projections for those two years as well," Murnieks said. "Since we now have data through May, we are in a better place to make those projections for the next two years than we were when we introduced the budget."
