In this report, the Congressional Budget Office compares the projections of federal revenues it produced each winter from 1982 to 2025 with actual revenues. That comparison shows the following results:
Total revenues. On the whole, CBO has tended to overestimate total revenues. Its projections for the upcoming fiscal year (known as the budget year) have tended to be more accurate than its projections for later years, mainly because of economic changes in later years that are difficult to anticipate. Factoring out changes in the economy significantly reduces the amount of error in CBO’s revenue projections for periods further ahead.
Revenues by source. The accuracy of CBO’s revenue projections varies greatly for different sources of federal revenues. On average, CBO’s projections of revenues from individual income taxes, payroll taxes, and excise taxes have been the most accurate, and its projections for other revenue sources have been less accurate. Because individual income taxes are the largest source of federal revenues, errors in projecting them contributed the most to the errors in CBO’s projections of total revenues.
Revenues in recent years. The period from 2020 to 2025 saw various unanticipated economic, legislative, and technical factors that significantly affected revenues. Those factors included the COVID-19 pandemic and lawmakers’ responses to it, administrative actions that altered tariffs and regulations, and inflation that was higher than expected.
Comparison with the Administration’s projections. Since 1982, CBO and the Administration’s Office of Management and Budget (OMB) have had similar errors in their revenue projections for the next budget year, on average. For revenue projections for the sixth year of a projection period, the errors in CBO’s projections were smaller than those in OMB’s projections.
