Revenue update: April tax receipts and methods suggest FY26 collections likely above HJ2 despite HR1 effects

Sam Schaefer of the legislative fiscal division told the committee that tax‑season collections through April provide a clearer view of FY26 general fund receipts and that several reasonable extrapolation methods put final collections above the HJ2 forecast.

Schaefer said ongoing general fund revenue was up about 6% year‑over‑year through April and pointed to several extrapolation scenarios: using the decade weakest May‑June would leave receipts below HJ2, while average or high May‑June scenarios place the final total well above HJ2. The fiscal division’s midpoint estimate implies roughly $170 million above HJ2.

Schaefer also described how HR1 (recent state tax changes) is visible in the returns: refunds at filing rose and taxable income as a percent of adjusted gross income fell (from a typical ~75% to about 67% among returns filed by May 1), indicating HR1 reduced taxable income even as adjusted gross income grew. He added that extension filers (who often hold larger liabilities) will still file later and could affect final totals.

The presentation noted mixed signals by source: withholding and estimated payments were generally strong, but corporate income tax was down about 7.7% and oil and natural gas production receipts were down year‑to‑date; Schaefer cautioned those sources remain volatile. Barb Wagner, economic analyst, added that Montana’s wage and GDP growth were solid despite slower employment growth in 2025, and that recent oil price spikes could have both negative consumer effects and positive production receipts.

Committee members asked follow‑up questions; staff offered to provide more detailed metrics and noted that final certainty will arrive when books close at the end of the fiscal year.