Massachusetts tax collections missed Healey administration’s mark last month but were up from a year earlier

BY COLIN A. YOUNG

Tax collections missed the Healey administration’s mark last month but were up from a year earlier, an increase that state officials largely attributed to the surtax and capital gains revenues that have buttressed the budget and satisfied the state’s recent spending appetite.

The Department of Revenue said it collected $4.599 billion in September ‑ $133 million or 3% more than what it collected in September 2024, but $64 million or 1.4% below the benchmark set for monthly receipts. The September revenue report was eagerly awaited as Beacon Hill finds itself on a budgeting tightrope.

“September revenue included increases relative to September 2024 collections in non-withheld income tax, sales and use tax, and ‘all other’ tax,” Revenue Commissioner Geoffrey Snyder said. “These increases were partially offset by a decrease in corporate and business tax. The increase in non-withholding income tax is likely driven, in large part, by surtax and capital gains tax revenues. The increase in sales and use tax is mostly the result of typical timing factors in collections and growth in retail sales and sales of meals. The increase in ‘all other’ tax is partly due to an increase in estate tax, a category that tends to fluctuate. The decrease in corporate and business tax is due to a decrease in estimated tax and return payments, partially offset by a favorable decrease in refunds.”

The state raked in $10.082 billion during the first quarter of fiscal year 2026, which is $309 million or 3.2% more than actual collections during the same period of fiscal 2025. But with monthly benchmarks towards the fiscal 2026 consensus revenue estimate of $43.614 billion now established, DOR said Friday that collections this year are so far running $64 million or 0.6% behind the year-to-date benchmark.

Tax collections are crucial to the state budget, which was approved as a $60.9 billion outlay for fiscal 2026 but will inevitably grow through supplemental spending bills. So too are federal revenues and reimbursements, which state budget managers can no longer rely on in the same way. This week, Snyder told Beacon Hill leaders that federal tax code changes could reduce the state’s fiscal 2026 tax collections by $650 million.

“This $650 million certainly impacts FY ’26 and impacts that calculations,” Senate Ways and Means Chairman Michael Rodrigues told reporters. “But we’re also seeing tremendous growth on the spending side, mostly around MassHealth and health care in general, [the Group Insurance Commission]. So I think we have some short-term issues to deal with relative to the changes in the federal tax code that we’ll have conversations about.”