Budget managers believe tax base will rise 2.9%

By Colin A. Young

[Coverage Developing] State officials agreed Wednesday to build their next annual

budgets on the estimate that Massachusetts will collect $44.9 billion in tax revenue,

2.9% more than is expected to come in this year.

Secretary of Administration and Finance Matthew Gorzkowicz, Senate Ways and Means Chair Michael Rodrigues and House Ways and Means Chair Aaron Michlewitz said their consensus revenue agreement includes revenue from the surtax on high-earning households. Excluding surtax revenue, the agreement foresees $42.2 billion in tax revenue for fiscal year 2027, an increase of 2.4% over the current fiscal 2026 benchmark.

The estimate "represents a responsible and sustainable projection for revenues,

including the income surtax, that captures growth in our economy as well as the

underlying uncertainty caused by actions at the federal level. This agreement will

enable us to present a thoughtful budget that protects key investments and

priorities, while also confronting the real challenges of controlling inflation-driven

spending growth and putting state finances on a structurally sound path forward,"

Gorzkowicz said.

The budget managers also agreed Wednesday to assume $2.7 billion in surtax

revenue will come in during fiscal 2027 and to cap surtax revenue spending at the

same amount. That would make $300 million more surtax revenue available for

spending compared to the fiscal 2026 budget, they said. Massachusetts collected

$3 billion from the surtax in fiscal 2025.

The announcement of a consensus revenue agreement, which was due by Thursday,

said it "assumes the full impact of the tax cuts" associated with the federal One Big

Beautiful Bill Act, though it said conversations "continue" about how the state will

handle the major tax provisions impacting collections.

Gov. Maura Healey plans to open the fiscal 2027 budget cycle by releasing her

spending bill later this month. Fiscal year 2027 begins July 1, 2026 and ends June 30,

2027.

Last year at this time, budget officials agreed on an overall fiscal 2026 consensus

tax revenue estimate that anticipated a 4.8% increase above fiscal year 2025, with

non-surtax tax revenue growth of 2.2%. Midway through fiscal 2026, tax revenues are up by about 1.9%.

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