Corporate profits give state tax windfall

Pennsylvania collects $1.14 billion from companies last month

Pennsylvania's state coffers saw a spike in corporate tax payments in September, a windfall that state officials said could be tied to companies making higher than expected payments due to surging profits from federal tariff refunds.

The state collected $1.14 billion in corporate net income tax payments in September -- 40% higher than the Independent Fiscal Office had projected and 65% more than the state collected from those taxes in the same month in 2025. September is one of the months in which corporations make their quarterly tax payments.

"One factor contributing to the unusual strength could be firms that made mid-year adjustments to account for federal tariff refunds that began in May and will continue through early fall," The IFO said in its revenue update released Thursday.

The state collected $325 million more in corporate income taxes than the IFO had projected and $466.9 million more than the Revenue Department predicted.

Revenue Secretary Pat Browne said tariff refunds are contributing to the spike in corporate tax payments but also attributed the state's strong tax revenue to Gov. Josh Shapiro's economic policies.

"Corporate Net Income Tax collections were very strong in September and are the main reason why we are over estimate for the month. Based on our preliminary analysis, there are a few factors driving these results -- strong corporate profits, the probable positive effects of recent Corporate Net Income rate reductions, and the impact of rescinded federal tariffs on corporations' taxable income," Browne said in a statement.

"We're also seeing the investments Governor Shapiro has made during his time in office leading to economic growth and a Commonwealth that is on firmer financial footing," Browne said.

The windfall is roughly on the same scale as some of the annual revenue projections tied to long-stalled proposals to legalize marijuana or begin regulating and taxing skill games.

Gov. Josh Shapiro in his budget proposal suggested that skill games would generate over a billion dollars a year. However, proposals touted by the skill game industry would tax play at a lower rate. Advocates for a proposal backed by businesses that host skill games said their plan would generate

$300 million a year in revenue.

Shapiro said Pennsylvania would collect more than $700 million in revenue from legalizing marijuana, but much of the revenue in the first year would come from fees from businesses seeking to grow or sell marijuana. Neighboring states with existing marijuana industries reported much lower annual tax revenue amounts.

Maryland collected $100 million in marijuana tax in 2025-26. New York collected $261.75 million in adult-use cannabis tax revenues during the 2025-26 fiscal year. New Jersey collected about $67.5 million in taxes from marijuana sales last year.

In all, Pennsylvania collected $4.8 billion in general fund revenue in September, which is $550 million more than anticipated. Three months into 2026-27, the state's general fund revenue is $529.3 million above estimate.