BOSTON.COM: Proceeds from ‘millionaires tax’ are through the roof, according to state projections
By Beth Treffeisen
This piece originally appeared in Boston.com on May 23, 2025.
The “millionaires tax,” which went into effect two years ago, is expected to generate billions.
State officials announced Tuesday in a letter that the surtax on high earners has generated more than $2.6 billion in revenue this fiscal year, with two months left.
The money will give state officials billions to spend on transportation and education initiatives. Any additional money raised beyond the $1 billion already budgeted would go to a reserve account, where state policymakers can ask for one-time investments in projects or programs.
In 2022, voters approved the ballot initiative that levies an additional 4 percent tax on annual earnings over $1 million.
The surtax generated $2.46 billion in its first full year — about $1.3 billion of it surplus — which lawmakers in the House and Senate are now debating how to spend. Both chambers are negotiating the competing proposals in the coming weeks.
The total revenue will only grow as further collections come in for May and June.
The Department of Revenue won’t certify the official amount raised until later this year.
Massachusetts Budget and Policy Center, a left-leaning think tank, projected that the surtax would generate about $2 billion annually. However, the surtax has brought in way more, with taxes generated between February and April alone this year generating $1.5 billion.
The revenues contradict predictions that affluent residents would flee the state if taxes were raised further.
According to a report from the Institute for Policy Studies and the State Revenue Alliance, people with a net worth of over $1 million grew from 441,610 in 2022 to 612,109 in 2024.
However, a pro-business coalition, the Mass Opportunity Alliance, argues the report is misleading and that true high earners are leaving the state.
Either way, how much the surtax will bring in the coming years is still unknown.
Doug Howgate, president of the Massachusetts Taxpayer Foundation, told the Boston Globe that the surtax is “highly responsive” to the stock market and the economy’s performance, making it difficult for lawmakers to predict how much it will bring in the future.
Already, many of President Donald Trump’s policies, such as tariffs, cuts to federal funding, and stricter immigration enforcement, are affecting the state’s economy.
Despite the extra surtax, the state still has to prepare for additional cuts from the federal government. Healey announced earlier this month a hiring freeze at the state’s executive branch, saying the move is “to prepare for more uncertain economic times.”
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