Mass. could see slight income tax cut Jan. 1
Massachusetts has hit the first of five triggers that need to be hit to force a slight income tax rate reduction on Jan. 1, 2016, according to the state revenue commissioner.
In a letter Thursday to Administration and Finance Secretary Kristen Lepore and high-ranking state legislators, commissioner Mark Nunnelly reported that fiscal year 2015 inflation-adjusted baseline tax revenues grew 5.37 percent over fiscal 2014. That's more than the 2.5 percent growth rate required under the tax cut trigger law.
A final determination on whether the income tax rate will fall from 5.15 percent to 5.1 percent will be made on Dec. 15, 2015. The Legislature and Gov. Charlie Baker factored the tax cut into the fiscal 2016 budget they assembled this spring and summer.
In 2000, Massachusetts voters passed a ballot law directing the state to lower the income tax rate to 5 percent. Rate cuts were implemented until 2002 when the Legislature, faced with plummeting revenues and an economic downturn, passed a package of tax increases and the current tax cut trigger law.
Baker made broad-based tax cuts a key aspect of his unsuccessful 2010 run for governor before winning the Corner Office in 2014 when he dialed back his pitch for major tax relief while pledging not to raise taxes as governor.
If the income tax falls in January, it would mark the second tax cut in six months. The state budget signed by Baker in July increased the value of the state earned income tax credit from 15 percent of the federal credit to 23 percent, a change that is expected to bolster income for more than 400,000 lower-wage workers and their families.
The Department of Revenue on Thursday also reported that August tax collections of $1.73 billion were up $100 million or 6.1 percent over August 2014. Over the first two months of fiscal 2016, collections of $3.4 billion are up 5.4 percent above the same period in fiscal 2015 and $39 million above benchmarks used for budgeting purposes.
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