Indiana’s tax collections came in ahead of expectations in February, offering another snapshot of a state economy that, at least for now, continues to hum along.
According to the latest monthly revenue report from the State Budget Agency, General Fund revenues totaled $1.423 billion for February, which was $63.6 million, or 4.7%, above the state’s forecast and $115.6 million higher than February of last year, an increase of 8.8 percent.
The stronger-than-expected performance was driven largely by higher collections from income taxes, sales taxes, cigarette taxes, and interest earnings.
Sales tax — the largest revenue source for the state — continues to show steady growth. Sales tax collections totaled $840.6 million in February, which was $7.6 million above the monthly estimate and $46.1 million higher than the same month last year, a year-over-year increase of 5.8 percent.
Because sales tax collections reflect economic activity from the previous month, February’s numbers largely represent consumer spending during January. Over the past several months, sales tax growth has remained fairly consistent, with year-over-year increases hovering between five and six percent.
Income tax collections also came in stronger than expected. Total income tax collections reached $420 million for February, which was $36.7 million above projections and $33.5 million higher than February 2025.
Most of that revenue came from individual income taxes. Individual income tax collections totaled $415.9 million, exceeding the forecast by $26.2 million and coming in $29.2 million higher than the same period last year.
Corporate income taxes, while a much smaller share of monthly revenues, also exceeded expectations. Corporate tax collections totaled $4.2 million, significantly higher than the monthly estimate.
Gaming revenues were mixed. Riverboat wagering taxes brought in $31.5 million, slightly above the state’s estimate, while racino wagering taxes totaled $12.3 million, about $1.1 million below projections.
Cigarette tax collections saw one of the biggest increases. February cigarette tax revenue totaled $42.6 million, which was 21.4 percent above the monthly estimate and dramatically higher than the same month last year. State officials attribute much of that jump to changes in state law affecting cigarette taxes.
The state also benefited from higher interest earnings on its reserves. Interest revenue totaled $33 million for the month, nearly double what forecasters had expected.
Looking at the fiscal year as a whole, Indiana’s revenues remain slightly ahead of projections. Year-to-date General Fund revenues total $14.37 billion, which is $74.2 million above forecast and about $958 million higher than collections at the same point last year, an increase of roughly 7.1 percent.
Sales tax collections are up 6.5 percent year-to-date, while total income tax collections have increased 5.3 percent compared to the previous fiscal year.
