Pennsylvania sees spike in December personal income tax collections
The new federal tax law likely caused a spike in state personal income tax collections in December, the Independent Fiscal Office said in a report released Tuesday.
Personal income tax collections came in $64 million above the estimate for the month.
Taxpayers who estimate their personal income taxes, instead of having them deducted by their employers, may have paid their estimates early to qualify for the uncapped state and local tax deduction that goes away in 2018, the report said.
“It is also possible that some taxpayers overpaid their tax liability because the overpayments are currently deductible, but the same payments may not be deductible next year,” the report says. “Hence, this large revenue gain will likely be reversed through the remainder of the fiscal year.”
The trend was partly offset by corporate net income taxes, which came in $42 million below the estimate.
Corporations are likely shifting their income reporting to 2018 to take advantage of lower federal income tax rates and are possibly accelerating deductions for 2017 because those deductions disappear in 2018, the report says.
Overall, state tax collections were $67 million above the estimate mainly because of the bump in personal income taxes and another bump in sales and use tax collections, the report says.