California revenues healthy in June
2024-25 agency cash collections for income taxes were above projections
California state income tax revenues ended the 2024-25 fiscal year in strong fashion, according to preliminary “agency cash” collection data from the state’s tax agencies.
Net collections of June 2025 personal and corporate income taxes exceeded budget act projections for that month by a combined $1.4 billion (5.7%). Withholding and quarterly estimated taxes both exceeded projections, and refunds tracked less than projected.
For the 2024-25 fiscal year as a whole, net personal income tax (PIT) collections exceeded the budget act forecast by $873 million (0.7%), and net corporation tax (CT) collections exceeded the fiscal year forecast by $430 million (1.1%). For the 2024-25 fiscal year, net PIT agency cash collections were $126.6 billion, and net CT agency cash collections were $39.5 billion.
The 2025-26 budget package—finalized last month—increased projected 2024-25 General Fund revenues by about $1.1 billion compared to the administration’s May Revision forecast, reflecting strong May and June collections. Those higher projections are reflected in the figures listed above, except that $100 million of the projected increase is attributable to the state’s insurance tax. The updated monthly projected revenue totals are online here.
The nine-month delay in tax payments by many higher-income Los Angeles County taxpayers, announced after the January wildfires, complicates revenue forecasting this year. The budget act projections anticipate several billion dollars of tax payments are delayed to October. It is possible that some of recent months’ revenue gains represents some of that revenue coming in earlier than expected. While October receipts will not be instantly identifiable as coming from Los Angeles or elsewhere, results this fall should help clarify this uncertainty with revenue forecasting.
Agency cash receipts for the 2024-25 fiscal year do not match precisely the budgetary revenue totals for 2024-25 that will be revised in next January’s Governor’s Budget proposal and which play a key role in setting the school funding guarantee for 2024-25 pursuant to Proposition 98. That is because the state’s revenue accrual rules dictate that some receipts collected by the state’s tax agencies in 2024-25 are accrued to 2023-24 and 2025-26. In simplified terms, this is because some 2024-25 receipts are attributable to tax year 2024 (and in part to fiscal year 2023-24) and some 2024-25 receipts are attributable to tax year 2025 (and in part to fiscal year 2025-26). But agency cash and budgetary fiscal year revenue totals are correlated, so strong agency cash collections tend to mean higher budgetary revenue totals for a fiscal year.
While California revenue trends remain reasonably healthy, significant economic risks loom, especially since the federal government keeps implementing erratic and, often, bizarre tariff policies. The recent federal tax and budget bill will stimulate the economy in some ways, while pressuring other elements of the economy, with significant tax reductions for higher-income taxpayers offset by noteworthy reductions in federal spending on the social safety net. Likely higher federal deficits due to the Republican bill could increase inflation and “crowd out” private investment.