Consensus Revenue Forecast

March 2026 Consensus Revenue Forecasts

General Fund

The Consensus Forecasting Group, comprised of economists at OSBM and the General Assembly’s Fiscal Research Division, has agreed upon a revised consensus General Fund Revenue forecast for the 2025-27 biennium.  

March 2026 Consensus General Fund Forecast Overview 

Source: OSBM-FRD  consensus revenue forecast as of March 24, 2026

Revenue Outlook for the Remainder of FY 2025-26 

The consensus forecast anticipates $35.1 billion in General Fund revenues in the current fiscal year, representing overcollections of $370 million (+1.1%). The upward revision is due to stronger economic growth than expected at the time of the last consensus forecast in May 2025. Year-over-year, this represents a 1.5% increase in total General Fund revenues compared to FY 2024-25. 

• Individual income tax (+$299M, +1.8%) accounts for the majority of the anticipated overcollections due to robust business profits, stable wage growth, and having a third consecutive year of double-digit growth in equity values.  
• Insurance premium tax (+$211M, +15%) and investment income (+$73M, +10%) also contributed to overcollections. Insurance premium tax collections are higher due to recent increases in property insurance premiums and rising Medicaid expenditures on enrollees in managed care health plans. Investment income is elevated from persistently high short-term interest rates.  
• The forecast includes lower growth in sales tax collections (-$156M, -1.4%), driven by higher-than-expected refunds to nonprofits and local governments along with slightly lower inflation on taxable goods than anticipated at the time of the last forecast. 

Revenue Outlook for FY 2026-27 

The consensus forecast anticipates $34.7B in General Fund revenue collections in FY 2026-27, an upward revision of 2.8% ($951M) relative to certified revenues. Year-over-year, this represents a 1% ($360M) decrease in revenues compared to the consensus forecast for FY 2025-26. This adjustment is associated with a stronger outlook for wage growth, equity values, and business profits than at the time of the last forecast. The economic outlook underlying the May 2025 consensus forecast anticipated a modest deceleration in economic growth starting in late 2025. Although job growth has slowed, business investment and profits have proven resilient.  

Looking ahead, lower short- and long-run interest rates, combined with fiscal stimulus from recent federal tax cuts for households and businesses, should modestly boost consumer spending and business investment through late 2026 despite continued sluggish job growth. Beginning in 2027, the economic outlook anticipates slowing growth in consumer spending and wages.

Previously enacted reductions in income tax rates will reduce revenue collections in FY 2026-27. Individual income tax rates fell from 4.25% in 2025 to 3.99% in 2026, and the consensus forecast anticipates revenue collections in both FY 2025-26 and FY 2026-27 will be high enough to trigger two additional 0.5% rate reductions. This will lower the personal income tax rate further to 3.49% in 2027 and then to 2.99% in 2028.  

Risks to the Forecast 

• Upside Risks:  
  • Last year’s strong stock market performance and rising corporate profits could lead to a positive “April surprise” with higher-than-expected income tax collections.
  • Sustained, strong productivity growth, whether driven by widespread AI adoption or other factors, poses a potential upside risk to personal and corporate income revenues if the result is higher wages and business profits.
  • Further increases in equity values could push incomes and consumer spending higher, boosting personal income and sales tax revenues.
• Downside Risks:  
  • The forecast assumes the ongoing conflict in the Middle East will stabilize and move toward resolution by mid-April. A prolonged Iran conflict could lead to persistently high prices and potential shortages of energy commodities. This would raise prices for businesses and consumers across the globe, reducing business investment and consumer spending on other goods and services and raising the risk of global recession.  
  • By many measures, stock prices for major U.S. corporations are historically high relative to corporate earnings. A sustained correction in equity values would lower taxable income from capital gains, slow business investment, and reduce spending by high-income consumers.
  • Productivity gains from AI adoption may not translate into strong wage growth and could instead reduce job growth, limiting upside to personal income and sales tax collections relative to forecast.
  • Additionally, changes in federal policy could alter the timing of state income tax payments, which poses a potential downside risk to April income tax payments.

Should the economic or revenue outlook change substantially by the time the Department of Revenue finishes processing April income tax returns, the Consensus Forecasting Group will consider revising the consensus forecast for General Fund revenues again in May.

Highway Fund & Highway Trust Fund  

The Consensus Forecasting Group has also agreed upon a revised consensus Highway Fund and Highway Trust Fund revenue forecast for the 2025-27 biennium. 

March 2026 Highway Fund Consensus Forecast Summary 

Source: OSBM-FRD consensus revenue forecast as of March 24, 2026

March 2026 Highway Trust Fund Consensus Forecast Summary

Source: OSBM-FRD consensus revenue forecast as of March 24, 2026

HF/HTF Revenue Outlook for the Remainder of FY 2025-26

For the remainder of FY 2025-26, the consensus forecast anticipates $3.4B in Highway Fund revenues and $2.5B in Highway Trust Fund revenues in the current fiscal year, representing overcollections of $48M (+1.4%) and $11M (+0.4%), respectively. The upward revision is due to a number of factors, including stronger consumption of motor fuels and higher auto sales than expected at the time of the last consensus forecast in May 2025. This represents a 0.8% increase in Highway Fund and a 2% increase in Highway Trust Fund revenues compared to FY 2024-25. 

• For the Highway Fund, licenses and fees account for the majority of the anticipated overcollections. This is due to continued strong population growth, which increases the number of vehicles registered in the state.
• For the Highway Trust Fund, investment income (+$10M, +30%) represents the majority of anticipated overcollections. Persistently high treasury yields, along with a high cash balance maintained by the NC Department of Transportation (NCDOT), resulted in higher investment income than anticipated.

HF/HTF Revenue Outlook for FY 2026-27

The consensus forecast anticipates $3.4B in Highway Fund revenue collections in FY 2026-27, an upward revision of $58M (+1.7%) relative to certified revenues. For the Highway Trust Fund, the consensus forecast anticipates $2.6B, an upward revision of $21M (+0.8%.) 

Looking forward to 2027 and beyond, lower short- and long-run interest rates should result in a more favorable environment for consumers looking to buy new and used vehicles, boosting revenues to the state’s 3% highway use tax. Fees collected from the state’s new transportation commerce tax should also be more robust than initially anticipated.  

The largest near-term risk is the ongoing conflict in the Middle East, which has increased gasoline prices and threatens to keep them elevated in the weeks and months ahead. A prolonged conflict would dampen travel, resulting in less motor fuel consumption, and weaken sales of motor vehicles due to lower consumer sentiment and less disposable income after accounting for higher spending on motor fuels. Furthermore, constrained global refining capacity is raising concerns about a possible shortage in diesel fuel, which could negatively affect state’s freight and shipping industries.

Lottery

March 2026 Lottery Consensus Forecast Summary

Source: OSBM-FRD consensus revenue forecast as of March 24, 2026
HB 125 Certified Lottery Revenues for FY 2025-26 and FY 2026-27 lower than consensus forecast. 

The consensus lottery revenue forecast revises the forecast for FY 2025-26 up $57M (+5.5%) compared to certified revenues and $15M (+1.3%) compared to the previous consensus, primarily due to higher-than-expected Powerball jackpots in September and December. Although sales for traditional games have slightly decreased, the decline was offset by continued growth in digital sales, approximately 20% year over year through February.  

The March 2026 consensus forecast revises FY 2026-27 lottery revenues upward by $57M (5.3%) compared to certified revenues and $12M (1.0%) compared to the prior consensus, primarily reflecting continued digital sales growth of approximately 8% year over year and the introduction of Xs and Os, a new standalone Powerball game expected to generate $2M in its first year. These gains are partially offset by a continuing decline in sales of traditional games.

Absent the addition of Xs and Os, the forecast anticipates almost no growth in lottery revenue in FY 2026-27, as the above-normal Powerball jackpots in FY 2025-26 are unlikely to be repeated. Furthermore, the forecast anticipates sales of traditional games will continue to decline and growth in sales of digital instants will decelerate.