By April Corbin Girnus
Nevada is projecting $12.4 billion in tax revenue over the next two fiscal years — $412 million, or 3.4%, more than what the state is projected to collect for the current biennium.
The Economic Forum, a five-member panel of private sector fiscal analysts, on Monday approved the state revenue forecast for the upcoming 2025-27 fiscal biennium, which begins July 2025 and runs through June 2027. The forecast provides the base for the governor’s executive budget, which will be given to the Nevada State Legislature prior to the start of the 2025 legislative session in early February.
The $12.4 billion figure represents expected revenue after more than $70 million worth of state tax credits have been applied. Before tax credits, the projected revenue for the upcoming biennium is $12.7 billion — a $495 million, or 4%, increase over the current biennium.
The Economic Forum sets its forecast by considering projections by economists at Moody’s Analytics and three different state agencies (the Legislative Counsel Bureau, the Department of Taxation, and the Governor’s Finance Office). The panelists on Monday largely gravitated toward more conservative projections, reflecting lingering uncertainty about the impact of economic policies promised by President-elect Donald Trump.
Emily Mandel, an economist at Moody’s, noted Nevada has among the highest percentages of foreign-born workers — above 22%. Trump has promised mass deportation of immigrants.
“If we have more restrictive immigration policies, if we have deportations or more restrictive legal immigration, for example, that will reduce the labor force, potentially impacting leisure and hospitality, potentially impacting home building (and) some of these areas that rely heavily on immigrant labor,” she said.
Mandel told the panelists Moody’s is assuming any new tariffs will not be as extreme as what Trump promised on the campaign trail because “any shakiness that we start to see in the economy is going to cause some pullback in more extreme policy suggestions.”
Trump last week said on his first day in office he would impose 25% tariffs on all imports from Canada and Mexico and another 10% tariffs on goods from China, in addition to other tariffs he has said would be imposed on China, until those countries stopped the flow of illegal drugs and migrants into the U.S.
During the campaign Trump proposed tariffs on China of as much as 60%.
Tariffs are viewed as inflationary because importers are likely to pass on the cost of the tariffs to consumers. After Trump won a second term, Moody’s adjusted its Nevada revenue expectations to project slightly higher inflation.
Inflation could lead to higher sales tax revenue as people pay more for things, Mandel said, though she added that she would not call that an upside because it puts a strain on consumers. It could also lead to a reduction in spending.
“Of course, none of this has actually been implemented yet,” she added. “The administration isn’t in place yet, and so there’s still uncertainties.”
Gov. Joe Lombardo’s office on Monday said it had no comment on the approval of the state revenue forecast. Lombardo last month declined to comment on the potential negative economic impact of tariffs and mass deportation.
Lombardo, a Republican endorsed by Trump, will have to work with the Democratic-controlled Legislature on the state budget. The Legislature passes the budget but Lombardo has the ability to veto it.
During the 2023 Legislative Session, lawmakers failed to pass a budget bill that required a two-thirds majority before the end of the session, forcing a one-day special session. Democrats do not have a supermajority in either chamber of the Legislature.
The Economic Forum is required by law to meet again on or before May 1, roughly a month before the end of the legislative session. The forum at that meeting may revise its revenue projections, which would then have to be reflected in the budget passed by state lawmakers and signed by the governor.
Nevada’s revenue sources
Sales tax is, by far, the largest generator of state revenue. It is expected to bring in $3.791 billion over the upcoming biennium and comprise 31% of general fund revenue.
Gaming tax, the second largest revenue generator for the state, is expected to make up 15.9% of general fund revenue, or $1.974 billion. That represents estimated increases of 1.1% and 1.2% in fiscal year 2026 and 2027.
Other major revenue sources for the state include: modified business tax (expected to be 14.9% of revenue before tax credits), insurance premium tax (expected to be 11.3%), commerce tax (expected to be 6%), and live entertainment tax (expected to be 3.5%).
