Like many businesses in the COVID-19 pandemic, states took a significant hit to incomes in 2020. In the second quarter of 2020 — or April through June — state tax collections dropped 29% compared to the same quarter in 2019. One reason for this is that many states, along with the federal government, shifted their income tax filing deadlines from spring to summer of 2020 — or from the second to third quarter — in response to the pandemic. But not all second quarter losses were due to the income tax delay: states also experienced declines in revenue from sources like sales and gas taxes as a result of social distancing and lockdowns.
Data from the third quarter — July through September — shows state tax collections rebounded compared to the second quarter, in part because some states collected that delayed income tax revenue. But during the first three quarters of 2020 combined, total state tax revenue was still down 4.4% compared to the same period in 2019.
