Chris Lisinski
BOSTON, MA…..State tax collections continued to cruise in May, putting the total haul with just one month left in the fiscal year more than $2.8 billion ahead of last year’s pace.
The Department of Revenue reported Wednesday that it collected $2.629 billion in May, which is $183 million or 7.5% more than in May 2024 and $139 million or 5.6% above the monthly benchmark.
Through the first 11 months of fiscal 2025, Massachusetts has brought in $39.148 billion, $2.84 billion or 7.8% more than the same span in fiscal 2024. It’s also $2.04 billion or 5.5% above the year-to-date benchmark.
A “significant portion” of the better-than-forecast tax collections came from the relatively new surtax on wealthy households and capital gains taxes, two streams that generally cannot be spent freely.
“May revenue included increases relative to May 2024 collections in withholding, non-withholding income taxes, corporate and business tax, and ‘all other tax,’” said Revenue Commissioner Geoffrey Snyder. “These increases were partially offset by a decrease in sales and use tax. The increase in withholding reflects current labor market conditions and some one-time events. The increase in non-withholding income tax reflects increases in income estimated payments and payments with returns and bills, partially offset by an increase in income tax refunds. The increase in corporate and business tax is primarily due to lower corporate refunds. The increase in ‘all other’ tax is mostly attributable to an increase in estate tax, a category that tends to fluctuate, and an increase in room occupancy tax.”
For the second year in a row, the state is facing a tricky budget management dynamic: total revenue collections are cruising above the prior year’s rates, but much if not most of the increase
appears attributable
to a pair of sources with strict limitations on how the money can be used.
Surtax dollars can only go toward education and transportation. Capital gains taxes are available for general spending but state law requires collections above a certain threshold to be steered into reserves. If other collections are slower, balancing the state’s books and making targeted investments can be more difficult.
The Department of Revenue
last month said
Massachusetts collected $2.598 billion from the surtax between July 2024 and April 2025, the first 10 months of the fiscal year.
DOR said it expects to certify a preliminary estimate of capital gains tax collections for that same July-to-April period on or around June 15.
Gov. Maura Healey took a preliminary step last month to rein in outlays by
imposing a freeze
on executive branch hiring, citing “widespread economic uncertainty at the national level and a tightening budget outlook.”
The House and Senate are pursing sizable spending increases for fiscal 2026, approving annual budgets with bottom lines more than 6% larger than the version Healey signed last summer, more than double the growth rate of the prior year.
Both drafts are built on federal reimbursement estimates crafted mostly before the Trump administration and Republicans in Congress began pursuing major federal funding cuts to Medicaid and other programs.
“Our budget proposal must consider all the unknowns that may or may not come out from Washington or beyond. We may have to address some of those issues during this conference. We may have to address those issues later in the year,” House budget chief Aaron Michlewitz
said last week
. “As that plays out on the national and federal level, we will have to keep our head in a swivel and make sure we are making the right decisions or prudent decisions for the commonwealth as we prepare for whatever comes from Washington and whatever uncertainty continues to unfold.”
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