County Income Tax Distribution for September is Up, Still Subject to Volatility

The Comptroller’s Office recently released information on the September local income tax distribution, which was paid to the counties on September 30.  The distribution, which totals $64.9 million, is an increase of 11.7% from the prior year.  It is composed of the following:

From the Comptroller’s Office electronic message:

Statewide, net local tax liability for tax year 2012 has increased by $189.1 million, growth of 5.4% (Table 5).  Adjusting for rate changes, underlying growth is 5.5%.  While 5.5% growth is welcome for such a volatile and uncertain economic year, for two reasons it seems likely that returns filed between now and the extension deadline will further increase that rate.  Primarily, our expectation is that the looming fiscal cliff encouraged a significant amount of income recognition in the fourth quarter of 2012, a portion of which was pulled forward from future years with the remainder as one-time special recognitions.  The taxpayers with those income characteristics typically file closer to the extension deadline.  Second, and of lesser consequence, exemption values were retroactively decreased for tax year 2012, a changed expected to generate roughly $21.5 million for local governments.  Because the change impacted higher income filers to a greater degree, more of that impact may be reported closer to the extension deadline.

Local income tax distribution information can also be found on the Comptroller’s website.

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