May 3, 2021

State Sales Tax Revenue Totaled $3.4 Billion in April

(AUSTIN) — Texas Comptroller Glenn Hegar today said state sales tax revenue totaled $3.4 billion in April, a record-high monthly total and 31.4 percent more than in April 2020.

Year-over-year increases for most tax revenues this month and in the coming months will be among the highest in the history of the data series. This is due to base effects: year-ago revenue collections to which this year’s collections are compared were severely suppressed by the pandemic. Nonetheless, this month’s sales tax collections were notably strong; compared to April 2019, sales tax collections were up 19.2 percent.

The majority of April sales tax revenue is based on sales made in March and remitted to the agency in April. Because of changes in estimated revenue collections and updated Legislative Budget Board estimates of the state obligation for Foundation School Program funding, Hegar is announcing a revised Biennial Revenue Estimate during a virtual press conference today at 2 p.m. on Microsoft Teams.

“Spurred by a number of factors, April state sales tax collections increased sharply from a year ago,” Hegar said. “Collections from all major sectors other than mining and construction rose significantly, led by receipts from restaurants and retailers.

“Part of the growth over last year is from depressed collections that began last April, especially from retail trade, restaurants, entertainment and other hospitality businesses most immediately impacted by the COVID-19 pandemic. Spending this March affecting April tax collections was supported by widespread business reopenings and the lifting of capacity restrictions, greater consumer confidence in going out as the vaccine rollout progressed, federal stimulus checks and spending delayed from February into March due to the winter storm and power outage.

“Retail sector remittances were up across the board, with especially notable increases from clothing stores, online retailers, general merchandisers, sporting goods stores and building materials and home furnishings stores. Clothing stores were especially hard hit by the closure orders early in the pandemic and continued soft consumer demand as much of the workforce worked from home, but now appear to be rebounding strongly as consumers return to stores and those resuming office work buy clothes again. Despite reopenings and the lifting of all capacity restrictions in March, stay-at-home behavioral trends established during the pandemic continue to support rapid growth in online shopping and elevated spending for home improvements and sporting goods.

“Tax receipts from restaurants were up significantly over the previous year’s levels, with the growth principally attributable to the restaurants geared to takeout and delivery, but some popular dine-in chains exhibited a vigorous rebound. Nonetheless, the dine-in segment continues to languish, with many establishments now permanently closed.”

Total sales tax revenue for the three months ending in April 2021 was up 4.5 percent compared to the same period a year ago. Sales tax is the largest source of state funding for the state budget, accounting for 59 percent of all tax collections.

Texas collected the following revenue from other major taxes, all of which were up sharply from a year ago due to base effects:

• motor vehicle sales and rental taxes — $378 million, up 130 percent from April 2020 and up 27 percent from April 2019;
• motor fuel taxes — $325 million, up 15 percent from April 2020 and up 1 percent from April 2019;
• oil production tax — $334 million, up 75 percent from April 2020 and down 3 percent from April 2019;
• natural gas production tax — $232 million, up 247 percent from April 2020 and up 81 percent from April 2019;
• hotel occupancy tax — $51 million, up 116 percent from April 2020 and down 20 percent from April 2019; and
• alcoholic beverage taxes — $119 million, up 110 percent from April 2020 and down 7 percent from April 2019.

For details on all monthly collections, visit the Comptroller’s Monthly State Revenue Watch. For an extensive history of tax policy developments and fees since 1972, visit our updated Sources of Revenue publication.