Treasury: February Major Revenues Down Slightly Primarily Due to Early Start on Tax Year 2025 Refund Processing

Treasury: February Major Revenues Down Slightly Primarily Due to Early Start on Tax Year 2025 Refund Processing

(TRENTON) - The Department of the Treasury reported today that February revenue collections for the major taxes totaled $3.091 billion, down $89.4 million, or 2.8 percent lower than last year. February is typically a minor month for revenue collections, with no key payment due dates. The month saw declines in the Gross Income Tax (GIT), mainly due to the early start on Tax Year 2025 refunds, and in the Corporation Business Tax (CBT).

Treasury expects Fiscal Year 2026 collections to continue showing moderate growth in the months ahead, as reflected in the updated Fiscal Year 2026 revenue forecasts included in the Governor's Budget Message for Fiscal Year 2027. Fiscal year-to-date, total major revenues of $27.991 billion are up $879.5 million, or 3.2 percent, compared with the same period last year.

February collections for the GIT, which are dedicated to the Property Tax Relief Fund, totaled $1.253 billion, down $201.0 million, or 13.8 percent lower than last year. The decrease was entirely due to Treasury's early issuance of the first large tranche of Tax Year 2025 refunds in late February, as opposed to the usual time frame of early March. The elevated level of refunds for the month more than offset the strong growth in employer withholding. Fiscal year-to-date collections of $12.469 billion are now up $818.9 million, or 7.0 percent above the same period last year.

The Sales and Use Tax (SUT), the largest General Fund revenue source, totaled $974.9 million, an increase of $21.1 million, or 2.2 percent over last year. Fiscal year-to-date collections of $8.197 billion are running $234.8 million higher, or 2.9 percent above the same period last year.

The CBT, the second largest General Fund revenue source, totaled negative $22.6 million in February, a decrease of $43.6 million, or 207.8 percent below last year. February is generally a low collection CBT month, with refunds commonly surpassing payments. Fiscal year-to-date collections of $1.389 billion are down $861.4 million, or 38.3 percent lower than the same period last year. The weakness in CBT revenues this fiscal year continues to be driven by significantly elevated levels of refunds, many of which have been claimed for tax periods prior to 2024, and substantial declines in both final and estimated payments.

February was an important month for the Insurance Premiums Tax (IPT), with the first prepayment of half the estimated calendar year liability due on March 1. February collections of $306.0 million were $49.9 million, or 19.5 percent higher than last year, although last February's IPT revenues were offset in part by refund issuances related to prior years' tax credits. Fiscal year-to-date collections of $255.9 million are up $94.1 million, or 58.1 percent above the same period last year.

Petroleum Products Gross Receipts Tax (PPGRT) collections in February of $137.3 million were higher by $7.1 million, or 5.4 percent above last February. Fiscal year-to-date revenues of $932.3 million are up $50.4 million, or 5.7 percent above the same point last year. The recently announced increase in the PPGRT rate of 4.2 cents per gallon took effect on January 1, 2026, and began impacting revenues in the February report, due to the one-month lag in reporting.

Please see the attached chart for monthly and yearly revenue collection comparisons.