Tax Revenue in Most States Surpasses Pre-Pandemic Growth Trend




As the first quarter of 2022 came to an end and the United States passed the two-year anniversary of the start of the COVID-19 pandemic, total state tax revenue was at its highest level since just before its historic decline in early 2020. Collections were 18.1% greater than those for the final quarter of 2019, after adjusting for inflation and averaging across four quarters to smooth seasonal fluctuations. Only Wyoming and North Dakota had not taken in enough revenue to surpass their pre-pandemic levels.

Nationwide and in 31 states as of the end of the first quarter of 2022, cumulative tax receipts since the pandemic’s start, adjusted for inflation, were even higher than they would have been if pre-COVID growth trends had continued—despite fallout from the pandemic and a two-month recession. According to Pew estimates, Idaho led all states, with 16% more cumulative tax revenue than it would have collected under its pre-pandemic growth rate. New Mexico was second at 15.5% above the trend. Nationally, combined tax revenue at the end of the first quarter of 2022 was 3% above estimates of what might have been collected had the pandemic not occurred.

However, estimates also show that cumulative tax revenue fell short of its pre-COVID growth trend in slightly more than a third of states since the pandemic’s onset, and most other states’ recoveries largely followed historical trends.

Looking at cumulative totals since the start of the pandemic offers a way to identify states in which tax revenue has over- or underperformed since January 2020, based on pre-COVID trends. This approach also provides a different view of the strength of collections from the often-astonishing quarterly and annual percentage increases that were skewed by this particularly volatile period. For each of the nine quarters from Jan. 1, 2020 to March 31, 2022, Pew calculated the difference between actual tax revenue and estimates of how much each state would have collected had revenue grown at its pre-pandemic, five-year average annual growth rate.

Author(s): Melissa Maynard

Publication Date: 7 Sept 2022

Publication Site: Pew Trusts