Massachusetts pulled in $2 billion more in tax revenue than expected this fiscal year, and officials say the state’s new 4% surtax on high earners is the reason.
A Big Win For Education And Transit
The surtax, known as the “millionaires tax,” applies to income over a threshold that adjusts each year for infl0ation. For 2025, that threshold is $1,083,150. The Massachusetts Department of Revenue last month certified preliminary estimates that the state collected $2.987 billion from the surtax in fiscal 2025, far more than the $1.3 billion state officials estimated. The state also collected $2.439 billion from taxes on capital gains. Under state law, the money must go toward education and transportation.
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“When we make the ultra-rich and corporations pay their fair share, we can improve life for our families and communities,” said Fair Share America Executive Director Kristen Crowell, one of the organizers behind the surtax campaign.
Tax collections overall rose 7.1% from the year before, totaling $43.7 billion, according to the Massachusetts Department of Revenue. Even without including surtax and capital gains revenue, the state still beat its forecast by $52 million.
Crowell is now leading a national push to bring similar tax policies to other states, saying the Massachusetts model proves it works.
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Revenue Surplus Amid Federal Cuts
The Boston Globe reported that Massachusetts Gov. Maura Healey warned the state still faces financial pressure due to federal cuts under President Donald Trump. His recent tax law, which includes $4.5 trillion in cuts, is expected to slash federal grants and push hundreds of thousands of Massachusetts residents off their health plans, according to Healey administration officials.
“All these unknowns are kind of descending on us at the same time,” Massachusetts Taxpayers Foundation President Doug Howgate told The Globe. Still, he noted the state is in a better place than last year, when it ended with a $233 million deficit.
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To prepare for possible shortfalls, Healey has already trimmed $130 million from the 2026 budget, extended a hiring freeze, and paused a planned 2% raise for executive branch managers.
Despite fears that the surtax would drive the wealthy out of Massachusetts, the number of millionaires in the state has actually gone up. Wealth at the top continues to grow, and the surtax has not resulted in the exodus critics warned about.
Fair Share America intends to continue pushing for tax justice nationwide. “Politicians will tell us that we can’t afford to spend more on our schools or in our communities. That’s dead wrong,” said Crowell.
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This article Massachusetts Collected $2 Billion More In Tax Revenue Than Expected. The Millionaires Tax Is Paying Off Big originally appeared on Benzinga.com
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