The State Budget Director’s Office on Tuesday reported January’s General Fund receipts totaled $1,358.5 million, a 3.7 percent decrease in collections compared to January 2025 totals.
The official revenue forecast calls for General Fund revenues to decline by 1.3 percent in FY26. Based on year-to-date collections, revenues can fall 1.6 percent over the final five months of the fiscal year and meet the estimate.
“Total receipts in January were $52.4 million less than what was collected in 2025,” said State Budget Director John Hicks. “A significant decline of $108.0 million in major business tax revenues was the primary reason. The prior year’s January collections were inflated by approximately $92 million in nonrecurring business tax payments.
“Individual income tax collections declined by only 2.3 percent despite a 12.5 percent reduction in the tax rate from 4 percent to 3.5 percent that became effective January 1, 2026. Among the other major accounts, sales and use taxes were up 3.5 percent and property tax revenues rose 39.2 percent. The large swing in property taxes was due to a timing issue of the receipt of $29.1 million in the public service property tax in January instead of December.”
Among the major accounts:
• Sales and use tax receipts were up 3.5 percent and have grown 5.0 through the first seven months of FY26. The $624.3 million in sales tax collections for January 2026 eclipsed last year’s record total of $603.1 million. The last two Januarys have been the only two months on record with sales tax receipts over $600 million.
• Combined corporation income and LLET tax receipts totaled $24.5 million in January, a decrease of 81.5 percent. Last year’s collections for the month were inflated by $91.9 million in non-recurring money received in FY25 that has affected comparisons to FY26. Year-to-date collections in business taxes have fallen 46.6 percent, but the rate of change should improve in the remainder of the fiscal year.
• Individual income tax collections fell 2.3 percent for the month. Withholding receipts fell 8.7 percent as increasing wages and employment offset part of the 12.5 percent statutory rate reduction that took place on January 1, 2026. Declarations rose by 29.3 percent, but these estimated payments were for tax year 2025 and unaffected by the rate reduction.
• Property tax collections rose 39.2 percent in January to $157.9 million. The period between November and February each fiscal year typically contain large monthly swings due to the timing and subsequent collection of the property tax bills, as well as bills under protest.
• Cigarette tax receipts grew 0.5 percent in January, the fourth consecutive monthly increase. Year-to-date revenues have increased 1.6 percent.
• Coal severance tax receipts had their third monthly increase this year, growing 24.2 percent. Year-to-date revenues in this account have fallen 3.8 percent.
• Income on investments of $20.5 million was 18.2 percent lower than January 2025. Year-to-date revenue from investments has declined 20.8 percent.
Road Fund receipts declined 0.5 percent in January. Increases in the motor vehicle usage tax collections have partially or completely offset declines in motor fuels revenues. Receipts for the month were $146.2 million and year-to-date collections have grown 0.1 percent. The official Road Fund revenue estimate calls for revenues to decline 1.0 percent for the fiscal year. Based on year-to-date tax collections, revenues can fall 2.6 percent for the remainder of the fiscal year to meet the official forecast.
Among the accounts, motor fuels collections fell 4.7 percent due to a drop in the tax rate while motor vehicle usage revenue rose 5.0 percent. License and privilege receipts rose 0.6 percent.
To access the full report, visit osbd.ky.gov.
Office of State Budget Director