The Governor's Office had expected $27.095 billion in revenue. The projected deficit was as high as $719 million in February.
Created in 2010, the IFO's main responsibility is to produce an official revenue estimate. The office's final revenue projection is due on June 15.
The IFO is projecting $28.16 billion in 2012-13 state revenue, according to the report. The forecast projects continued recovery for the Pennsylvania economy.
It predicts real gross state product will expand by 1.7 percent in 2012 and 2.3 percent in 2013, which implies higher employment levels.
Consumer outlook has improved, but remains guarded due to higher gas prices, historically high debt levels and uncertainty over federal tax policy, the report said.
Gov. Tom Corbett has proposed a $27.14 billion budget for the 2012-13 year that begins July 1. Lawmakers returned Monday to begin negotiations on a fiscal blueprint.