April this year brought a nice surprise for federal and state tax collectors. Uncle Sam enjoyed unexpectedly robust net income tax receipts of $483 billion, amounting to a $103 billion or 27%, increase over April 2023, according to the Congressional Budget Office. Uncle Sam can use the revenue, but even a $100 billion surprise will hardly make a dent in ongoing massive federal deficits.
The increase was driven by a $77 billion, or 26%, increase in final payment of non-withheld income taxes, namely net taxes paid in estimated installments throughout the year. A large portion of non-withheld taxes are taxes on capital gains.
Connecticut enjoyed the same unexpected serendipity. Net non-withheld individual income taxes in April hit $1.7 billion, amounting to a $275 million, or 19%, gain over April 2023. Yet towering deficits loom.