State Tax Take Grows Most Since 2007 U.S. Recession

State income-tax collections in the first quarter were the strongest since the start of the recession in 2007, according to a report by the Nelson A. Rockefeller Institute of Government.

Personal income-tax collections grew 17.6 percent in the first quarter compared with the same period a year earlier, the report released today said, citing data from 47 states. The 9.3 percent increase in all revenue was also buoyed by a growing economy, and higher income levies that California voters approved in November.

“State tax revenues have been continuously recovering for three years,” the Albany, New York-based nonpartisan research group said in an e-mailed statement. “However, state revenue recovery has been much slower and more prolonged than in previous recoveries and is still far from full recovery.”

The growth may slow in the second half of the year as states lose out on revenue from taxpayers who shifted income and dividends into 2012 to avoid higher federal taxes imposed as part of deficit negotiations in Washington, according to the the report. Those taxes were mostly collected in the first and second quarters of 2013.

Voters in California approved higher tax rates on incomes starting at $250,000. Those making $1 million or more pay 13.3 percent under the new law, the most of any state.

The increases were expected to raise an estimated $6 billion annually and expire by 2018. When California is excluded from the first quarter calculations, income tax collections in the rest of the states grew a collective 9 percent, Rockefeller said.

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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