March appears to be headed for a strong finish in personal income and corporate tax payments.   For the month through March 27, personal income taxes (net of refunds) totaled $2.7 billion, a gain of $292 million from a year ago and $161 million above estimates.  Capital gains have been substantial, with stock prices up 18% over the past year accompanied by a 21% climb in home prices.

For much of the month of March, corporate income taxes have been outperforming estimates.  For the month through March 27, corporate taxes totaled $1.5 billion, a number $108 million above estimates.  This outperformance reflects the improvement in the operating profits of many companies and the ending of write-offs from prior years’ losses.

Yesterday was the 19th working day of the month. Compared to last year, cumulative monthly collections for the three major taxes have been consistently higher since mid-March.  If collections continue at this pace, the state can expect to collect over $6 billion in March, generating roughly $700 million more than last year, and posting a 13% year-over-year change

Revenues Beating Estimates

For the fiscal year through March 26, revenues from California’s three major sources (Personal Income tax, Corporate tax, and Sales tax), totaled $62.6 billion.  This is $920 million above estimates.  Although sales taxes are trailing estimates, personal income and corporate taxes are well ahead of projections.

March is a telling month for the corporate tax, as the law requires most businesses to make their final corporate tax payments on or before March 15.  After accounting for calendar anomalies and processing delays, the days immediately following the due date tend to have the highest collections.   On March 18, 2013 for example, the state received $787 million of the $1.6 billion (49%) it would collect for the entire month. 

By March 23 of last year, the state had collected 95% of the month’s corporate tax revenues.  If that same collection rate applies in the current year, the state can expect to collect $1.4 billion from the tax, which is slightly above what the Department of Finance had estimated for net March receipts.