County Income Tax Distributions Up, But Not Expected to Last to Year’s End

According to the Comptroller’s electronic message, first quarter local income tax distributions total $872.2 million, an 11.6% increase over prior year.  The distribution is based on withholding and estimated tax payments attributable to the first quarter of calendar year 2012.

However, the State’s current revenue forecast does not anticipate continued growth in withholding and estimated tax payments to last through the end of the calendar year.

Current official statistics indicate that employment in the State increased 1.8% in the first quarter, the best performance since the fourth quarter of 2000 (though only marginally better than the first quarter of 2006).  Withholding receipts attributable to the first quarter reflect that strong growth, increasing 8.0%.  Estimated payments grew 14.0% for the first quarter, well ahead of recent periods.  Unlike withholding, for which growth in one period is generally related to growth in the period before, growth of estimated payments can be quite volatile due to safe harbor requirements and the fact that taxpayers’ expectations for income and tax liability can change over the course of the year.

If counties intend to change their local income tax rate for tax year 2013, the Comptroller’s Office must be notified by July 1, 2012.

If you have any questions about the May distribution, please contact Bill Blum of the Revenue Administration Division at (410)260-7501.

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