The Massachusetts state operating budget is built on a number of revenue sources, primarily state taxes and federal reimbursements for programs such as Medicaid. A summary of the revenue sources for fiscal year 2011 is below.

Pie chart depicting state fiscal year 2011 projected revenues in 7 categories. Income tax is the largest at 34%, followed by federal reimbursements at 28%, Sales tax 11%, Departmental revenue 9%, and other taxes, fund transfers and corporate taxes, all at 6%.


Trend line depicting state revenues by fiscal year from 2006 to 2010 and 2011 projections. All sources appear to rise through 2008. Income tax falls in 2009 and 2010 and begins rising in 2011. Federal reimbursements rise dramatically in 2009 and continue in 2010 and 2011. Sales tax begins rising in 2010.


State Operating Budget Revenue Source Descriptions

  1. Income Tax - the state tax paid in Massachusetts on personal income.
  2. Federal Reimbursements - reimbursements from the federal government for state services. The largest reimbursement is for Medicaid, which is typically 50% of every dollar spent, but was temporarily set at 61.59% from October 1, 2008 through December 31, 2010 as part of the American Recovery and Reinvestment Act.
  3. Sales Tax - proceeds from the state sales tax, which was 5% through August 31, 2009, and went to 6.25% on September 1, 2009. The amounts shown have been adjusted to remove the portion dedicated to support the MBTA and the School Building Authority.
  4. Departmental Revenue - primarily fees paid for state services. The largest sources are from the Registry of Motor Vehicles, industry assessments, court fines and professional licenses.
  5. Other Taxes - include motor fuel, cigarettes, insurance, estate and deeds-excise taxes.
  6. Fund Transfers - include profits from the State Lottery, transfers from the Stabilization funds, payments under the tobacco settlement and abandoned property transfers, among other sources.
  7. Corporate Taxes - the amounts paid by corporations on their corporate income.

State Operating Budget Revenue Summary by Fiscal Year (in millions)##

 

2006

2007

2008

2009

2010

Projected
2011

Income Tax

10,483

11,400

12,484

10,584

10,110

10,927

Federal Reimbursement**

5,210

6,168

6,430

8,251

8,549

8,961

Sales Tax*

2,803

2,776

2,696

2,399

3,239

3,483

Dept. Revenue

2,094

2,218

2,356

2,326

2,801

2,934

Other Taxes

2,609

2,682

2,797

2,259

2,221

2,123

Fund Transfers

1,715

1,785

2,039

1,850

1,789

1,857

Corporate Taxes

1,391

1,588

1,512

1,549

1,600

1,829

Total

26,306

28,616

30,313

29,217

30,310

32,114

Notes:
* The Sales Tax rate increased from 5% to 6.25% on August 1, 2009.
** Federal reimbursements for Medicaid rose in FY09-11 due to stimulus funding.
## These operating budget revenues do not include capital funds, trusts or grant monies.