It’s no secret that things have gotten expensive. What may be less well known is that the sticker shock for consumers has been a bonus for the state budget as sales tax revenue has exceeded projections, the state Independent Fiscal Office said in a revenue update released Wednesday.

In addition, better-than-expected corporate profits and stock performance are also providing a boost, Matt Knittel, the fiscal office’s director told reporters.

A year ago, officials had expected that President Donald Trump’s tariff strategy would weigh on profits and stock prices. But the impact of the tariffs wasn’t as bad as expected and business spending linked to data center expansion has generated more sales tax revenue, Knittel said.

“The S&P 500 index was forecast to contract by 6.6%. The revised forecast just put out this month is for a gain of 12.7%. So, that is a nearly 20 percentage point swing in the forecast for 2026 for U.S. corporate profits for 2026,” Knittel said. “We had a flat profits forecast last year, 0.2%. That has since been revised up to 15.5%. So one of the reasons this occurred is because last June, the tariffs, the new tariffs were being enacted, and at the time, the consensus was that this would cause a contraction in both profits and the stock market. It turned out that did not happen and instead we had very strong growth.”

Through April, non-motor vehicle sales tax collections were $628 million more than forecasters had predicted. In addition, the state brought in $115 million more in gross receipts tax revenue largely due to higher residential electric bills, Knittel said.

With those changes, the fiscal office has updated its revenue estimate for 2025-26 and is now estimating that the state will end the year with $48.77 billion in revenue, $848 million more than officials had originally forecasted.

For the coming fiscal year, the office has set an initial revenue estimate of $49.56 billion, an increase of $789 million (+1.6%) from the current fiscal year.

While the higher consumer prices have boosted state revenues, the spike in gas prices could begin eating into those gains if consumers start cutting other spending to compensate for the higher costs at the gas pumps, he said. Gas prices have increased 35% since February and fueling up now consumes about 3% of total household income for families earning between $50,000 to $150,000 a year, Knittel said.

The state does not collect sales tax on gas and the motor fuel tax is directed toward road work.