Press Release  Fiscal Year 2023 Revenue Collections Totaled $39.164 Billion

(Boston, MA) — Massachusetts Department of Revenue (DOR) Commissioner Geoffrey Snyder today announced that preliminary revenue collections for June totaled $4.137 billion, $6 million or 0.1% less than actual collections in June 2022, but $394 million or 10.5% above benchmark.¹ June 2023 revenue collections were impacted by the elective pass-through entity (PTE) excise. After adjusting for DOR’s estimate of the net impact of PTE excise², June 2023 collections are $9 million or 0.2% less than actual collections in June 2022, but $274 million or 7.5% above the June 2023 benchmark.

Revenue collections for fiscal year 2023 totaled approximately $39.164 billion, $1.941 billion or 4.7% less than collections in fiscal year 2022, and $605 million or 1.5% below the fiscal year 2023 benchmark.³ After adjusting for DOR’s estimate of the net impact of PTE excise², fiscal year 2023 revenue collections are $112 million or 0.3% less than actual collections in fiscal year 2022, and $335 million or 0.8% below the updated fiscal year 2023 benchmark.

“The decrease in fiscal year 2023 revenue collections in comparison to fiscal year 2022 is primarily driven by a decrease in capital gains tax collections relative to last year’s unprecedented collections and an increase in PTE members applying credits to reduce their tax payments,” said Commissioner Snyder. “These decreases were partially offset by increases in withholding and sales and use tax. The increase in withholding was driven by current labor market conditions and the increase in sales and use tax was driven, in part, by continued strength in retail sales.”

In a letter to the State Comptroller today, DOR certified that the preliminary total capital gains tax revenue collected in fiscal year 2023 was $2.237 billion, generating a total fiscal year 2023 transfer of approximately $833.6 million to the Stabilization Fund, the State Retiree Benefits Trust Fund, and the Pension Liability Fund. The fiscal year 2023 estimate of $2.237 billion excludes an estimated $103.6 million in capital gains tax revenue collected from the 4% income surtax^4,5.

June is a significant month for revenues because many individuals and corporations are required to make estimated payments. Historically, roughly 11.1% of annual revenue, on average, has been received during June, making it the second or third largest revenue month of the year.

Details:

Preliminary June Revenue Collections:

• Income tax collections for June totaled $2.108 billion, $350 million or 19.9% above benchmark, and $53 million or 2.6% more than June 2022. After adjusting for DOR’s estimate of the net impact of PTE excise, income tax collections for June 2023 are $230 million or 13.8% above benchmark, and $50 million or 2.7% more than June 2022.
• Withholding tax collections for June totaled $1.377 billion, $54 million or 4.1% above benchmark, and $140 million or 11.3% more than June 2022.
• Income tax estimated payments for June totaled $699 million, $244 million or 53.5% above benchmark, but $108 million or 13.3% less than June 2022.
• Income tax returns and bills for June totaled $109 million, $15 million or 15.7% above benchmark, but $6 million or 5.6% less than June 2022.
• Income tax cash refunds for June totaled $78 million in outflows, $38 million or 32.9% below benchmark, and $27 million or 25.6% less than June 2022.
• Sales and use tax collections for June totaled $859 million, $50 million or 6.2% above benchmark, and $48 million or 5.9% more than June 2022.
• Meals tax, a sub-set of sales and use tax, collections for June totaled $137 million, $5 million or 3.9% above benchmark, and $5 million or 3.8% more than June 2022.
• Corporate and business tax collections for June totaled $895 million, $33 million or 3.5% below benchmark, and $111 million or 11.0% less than June 2022.
• “All other” tax collections for June totaled $276 million, $26 million or 10.6% above benchmark, and $5 million or 1.7% more than June 2022.

Preliminary Fiscal Year 2023 Revenue Collections

• Income tax totaled $21.779 billion, $1.073 billion or 4.7% below benchmark, and $2.557 billion or 10.5% less than fiscal year 2022. After adjusting for DOR’s estimate of the net impact of PTE excise, income tax collections are $804 million or 3.5% below benchmark, and $728 million or 3.2% less than fiscal year 2022.
• Withholding collections totaled $16.654 billion, $26 million or 0.2% above benchmark, and $739 million or 4.6% more than fiscal year 2022.
• Estimated payments totaled $3.759 billion, $345 million or 10.1% above benchmark, but $829 million or 18.1% less than fiscal year 2022.
• Income tax payments with returns and bills totaled $3.924 billion, $1.447 billion or 26.9% below benchmark, and $1.800 billion or 31.4% less than fiscal year 2022.
• Income tax refunds (outflows) totaled $2.558 billion, $3 million or 0.1% below benchmark, but $667 million or 35.3% more than fiscal year 2022.
• Sales and use tax collections totaled $9.401 billion, $133 million or 1.4% above benchmark, and $635 million or 7.2% more than fiscal year 2022.
• Corporate and business tax collections totaled $5.062 billion, $216 million or 4.5% above benchmark, but $7 million or 0.1% less than fiscal year 2022.
• “All other” tax collections totaled $2.922 billion, $120 million or 4.3% above benchmark, but $12 million or 0.4% less than fiscal year 2022.

June 2023 Tax Collections Summary (in $ millions) Preliminary as of August 11, 2023

Footnotes

1

Benchmarks are updated for the months of March 2023 through June 2023 based on the revised fiscal year 2023 revenue estimate of $39.768 billion .They are available on DOR’s website at https://www.mass.gov/lists/year-to-date-and-monthly-tax-collection-benchmark-ranges#fy-2023-.

2

DOR’s estimate of the net impact of PTE excise is based on a limited number of PTE member returns received as of April 2023. This estimate will be revised sometime after October 16, 2023 when returns for extension filers are due.

3

On March 3, 2023, DOR announced that preliminary year-to-date collections through February were $999 million above the year-to-date original benchmark. Fiscal year 2023 revenue collections are $454 million or 1.1% below original fiscal year 2023 benchmark.

4

Pursuant to the FY2024 budget signed by the Governor on August 9, 2023, income surtax revenues collected and deposited into the Education and Transportation Fund shall not be considered tax revenues collected from capital gains income for the purposes of section 5G [of Chapter 29 of the General Laws]. The commissioner of revenue shall estimate, in the capital gains tax certification in the fourth quarter of the fiscal year, the amount of revenue to exclude from the section 5G calculation; provided, however, that this estimate shall be final. https://budget.digital.mass.gov/summary/fy24/

5

The $103.6 million estimate of capital gains tax revenue collected from the 4% income surtax is based on the fiscal year 2023 estimate of total surtax revenue of between $229 million and $265 million included in DOR’s January 24, 2023 Consensus Revenue Hearing Testimony.

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