Updates About Revenue Reports

The House Fiscal Agency’s June 2025 Revenue Report brought positive short-term news, with major tax revenues and lottery earnings totaling $3.3 billion—an 8.3% increase from June 2024 and $64 million above the May 2025 Consensus Revenue Estimating Conference (CREC) projections. General Fund revenues were bolstered by stronger-than-expected individual income and corporate tax collections, contributing to a $71.8 million surplus above forecasts. Individual income tax revenue alone totaled $1.5 billion (up 15.5% year-over-year), and corporate income tax revenue exceeded estimates by more than $30 million. However, revenues dedicated to the School Aid Fund missed projections by $17 million, with an additional $9.2 million redirected to other earmarked funds.

Looking ahead, however, the recently enacted federal One Big Beautiful Bill Act of 2025 (OBBBA) may substantially alter Michigan’s fiscal landscape over the next decade. The act introduces sweeping federal tax changes that are expected to reduce Michigan’s business tax base and, consequently, state revenue. The House Fiscal Agency now anticipates Michigan could lose $677 million in FY 2025-26, $613 million in FY 2026-27, and $444 million in FY 2027-28 due to provisions such as expensing for research and experimental costs, Section 179 expansion, and limitations on business interest deductions. While some of these losses will taper off by FY 2030-31, Michigan is expected to forgo billions in revenue over the long term unless it decouples from the affected federal tax provisions.

As lawmakers head into the next phase of FY 2026 budget negotiations, they will need to balance the strong performance of current revenues with the looming structural changes driven by OBBBA. These federal changes, combined with upcoming reductions in Medicaid and SNAP cost-sharing adjustments, will likely place additional pressure on the state’s General Fund in the years to come.

Review previous revenue estimates and CREC reports here.

The state’s next Consensus Revenue Estimating Conference (CREC) will take place on Friday, May 16, 2025, at 9 a.m. in the Capitol Building’s House Appropriations Committee Room.

At the conference, state fiscal agents and economists will present updated forecasts for the federal and Michigan economies, along with revised revenue projections for the remainder of Fiscal Year 2025 and the upcoming ’26 and ’27 fiscal years. The official revenue estimates, which guide the state’s budget process, will be agreed upon by the State Treasurer or State Budget Director, the Director of the Senate Fiscal Agency, and the Director of the House Fiscal Agency.

The CREC will be available to watch live here on the day of the event.

The Senate Fiscal Agency’s February 2025 Revenue Report shows that the state’s tax revenues totaled $1.3 billion for the month, reflecting a 5.8% increase from February last year. However, fiscal year-to-date General Fund collections fell short of expectations by $127.3 million, while School Aid Fund collections exceeded forecasts by $24.1 million. Despite lower-than-anticipated use tax revenues and increased individual income tax refunds, the elevated collections from income tax withholding, the Insurance Tax, and Corporate Income Tax helped offset the gap.

Sales tax receipts rose 1.6% year-over-year to $774.3 million, surpassing projections by $24.4 million, while use tax collections fell 2.7% below February 2024 levels. Business tax revenues showed improvement, with net Michigan Business Tax, Corporate Income Tax, and the repealed Single Business Tax contributing $50.7 million—an increase from the previous year’s negative returns. Real estate transfer tax collections also rose significantly, increasing 24.1% from February 2024.