The Department of Revenue reported Thursday that it took in $1.8 billion in tax collections in February, a haul that surpassed expectations for that month by $293 million but represents less than the state collected in February 2021.
Revenue Commissioner Geoffrey Snyder said the primary reason for the decrease from last February to this one was a drop in withholding tax collections related to timing, as “certain payments that were received in February 2021 were captured in January this year.”
Massachusetts paid out $405 million in income tax cash refunds last month, $188 million less than was projected, which Snyder said was the “main contributor to the above benchmark performance for the month.”
“However, this favorability may be temporary as refund activity will likely increase as the tax season progresses,” he said.
With no estimated payments required from individual or business taxpayers, February is typically the state’s smallest revenue month, accounting for less than 6 percent of the year’s total.
Through February, fiscal 2022 tax collections have totaled about $23.673 billion, more than $4 billion above the same period in fiscal 2021 and more than $1.7 billion above year-to-date benchmarks.
As it has done in each of the prior two months, the Department of Revenue said February collections are affected by a change in state law affecting taxes for pass-through entities, or businesses that pass all income on to owners and investors.
After adjusting for the pass-through payments, DOR said, February collections are $291 million above projections — and $94 million below February 2021 — and year-to-date collections are $1.083 billion above benchmark. The department cautioned that its February figures “should not be used as predictors for the remainder of the fiscal year,” in part because of the situation with the pass-through payments.
State budget-writers have already raised their revenue expectations for this year by $1.5 billion, to $35.9 billion.