Millionaires tax could generate up to $3B in fiscal 2025
Photo | Courtesy of Commonwealth of Massachusetts
Massachusetts State House
State budget honcho Matthew Gorzkowicz told municipal officials Tuesday that the state is on track to rake in nearly $3 billion from its surtax on household income greater than about $1 million, more than double the estimate used to craft this year's budget.
The Department of Revenue reported last month that the state had collected just less than $2.6 billion from the 4% surtax between July 1, 2024 and April 30, 2025, surpassing the $2.46 billion that the surtax generated in fiscal 2024 in just 10 months of fiscal 2025. May and June collections are expected to add to that total, and Gorzkowicz said Tuesday that he now thinks total fiscal 2025 surtax collections "could be closer to $3 billion."
"We will have the benefit of being able to spend those dollars on education transportation, as you've seen us do with our January supp as part of our transportation package this past year," the secretary of administration and finance told the Local Government Advisory Commission, referring to the surtax surplus spending bill that is now in conference committee. "We'll have another opportunity to do that again."
The Healey administration and legislative Democrats have used conservative collection estimates in the first few years of the surtax, which was approved by voters in 2022. Under the constitution, revenue generated by the surtax can only be used for education or transportation initiatives and the conservative estimating has given lawmakers extra money to dole out separate from the traditional state budget process.
When they built the fiscal 2025 budget, the administration and legislative leaders agreed to spend $1.3 billion in surtax revenue this year. If Gorzkowicz's estimate proves correct, the Legislature could have as much as $1.7 billion to spend sometime after DOR certifies the full-year surtax collection amount in the fall.
When they agreed on a consensus revenue estimate for fiscal 2026 earlier this year, Gorzkowicz and the Ways and Means Committee chairs mutually estimated the state will collect $2.4 billion from the income surtax in fiscal 2026. But they agreed to spend at most $1.95 billion from that in the annual budget bill, which like the surtax surplus bill is also the subject of conference committee negotiations.
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