Virginia runs $394 million ahead of revenue forecast through October

Virginia collected $141 million more in general fund revenue than expected in October, putting the state $394 million ahead of its revenue forecast just four months into the fiscal year. A new tax on data centers’ energy use brought in $66.5 million, accounting for about half of the month’s revenue growth from a year earlier. 

General fund revenue rose 6.3% from October 2025 to $2.19 billion, Gov. Abigail Spanberger’s office announced Friday. Collections through October totaled $10.47 billion, up 7.7% from the same period last year and 3.9% above projections in the current budget, according to the state’s October revenue report.

Corporate income taxes and individual income taxes paid outside payroll withholding accounted for most of the surplus. Together, the two sources generated $328 million more than expected, roughly 83% of the amount collected above forecast.

“October revenues came in $141 million above forecast, and every major tax source except recordation is running ahead of expectations for the year. That’s a great place to be heading into the budget cycle,” Finance Secretary Mark Sickles said in a statement. 

Sickles cautioned that corporate income taxes and nonwitholding payments, which include estimated income tax payments, are among Virginia’s most unpredictable revenue sources. 

He said the stronger collections could justify raising revenue projections, but the administration would remain cautious as it prepares the next biennial budget, citing persistent inflation and the possibility of another Federal Reserve interest rate hike in December. 

Virginia collected $91.4 million from the data center consumption tax in the first four months of the fiscal year. The state projects the tax will bring in $600 million by June 30.

Corporate income taxes also rose sharply, reaching $90 million in October compared with $8.3 million a year earlier. Through October, corporate receipts totaled $666.4 million, a 77.8% increase from the same period last year. 

Sales and use tax collections rose 3.9% for the month and were up 7.4% for the fiscal year to date.

But not every revenue source grew in October.

Payroll withholding, Virginia’s largest source of general fund revenue, fell 4.6% from a year earlier, a decline of about $72.8 million. Despite the monthly drop, withholding collections remained 3.6% higher through the first four months of the fiscal year.

Net individual income tax revenue, which includes withholding and other payments after refunds, declined 3% in October but was up 4.4% for the year to date.

The state entered October $253.7 million ahead of forecast, with September collections up 8% from the same period a year earlier. 

September included quarterly payment deadlines for corporate income and nonwithholding taxes, both of which exceeded expectations. Sales and use tax revenue had grown to 8.5% through September before easing to 7.4% through October. 

Despite this year’s strong start, Virginia was further ahead of its forecast at the same point in each of the two previous fiscal years. 

Through October 2025, general fund collections were up 5.5% from a year earlier and $497 million above forecast. 

A year before that, October 2024 figures showed collections running 8.6% above the previous year and $403.3 million ahead of forecast, even though corporate income taxes were $56.8 million below expectations. 

Virginia also finished the last fiscal year, which ended June 30, with a sizable surplus. 

According to preliminary figures released in July, general fund collections exceeded projections by $936.3 million after growing 6.7%, largely because of individual incomes and sales taxes. 

The two-year state budget incorporated $585.5 million of that surplus into the starting balance for the current fiscal year. 

Spanberger pointed to the latest revenue figures while renewing her criticism of federal economic policies. 

“With the war in Iran and reckless policies out of Washington burdening Virginians, my focus continues to be on saving money for families and protecting the long-term strength of our economy,” she said in a statement. 

Earlier this week, Spanberger and Democratic General Assembly leaders unveiled their Moving Virginia Forward agenda for the 2027 legislative session, including proposals to forgive medical debt and address housing costs.