State tax collections soared by more than 20 percent in the last year and are up nearly 40 percent over the last two years, the Department of Revenue said Thursday as it announced that it took in $41.105 billion for the budget year that ended June 30.
Final fiscal year 2022 collections of $41.105 billion were up $6.982 billion or 20.5 percent over actual collections in fiscal year 2021 and were $3.438 billion or 9.1 percent more than what the Baker administration was expecting to collect. June collections of $4.143 billion ($780 million or 23.2 percent above benchmark) helped fuel the strong finish to the fiscal year.
Despite worries early in the COVID-19 pandemic that the state could face massive budget shortfalls, state tax collections have instead taken off. The fiscal year 2022 haul is 38.83 percent greater than what the state took in during fiscal year 2020, which included the earliest months of the pandemic. And the fiscal 2022 total of $41.105 billion is about 4 percent more than the $39.576 billion revenue expectation that the administration and lawmakers agreed to bake into the fiscal year 2023 budget.
“Fiscal Year 2022 revenue collections reflect unprecedented capital gains tax revenue, the temporary impact of [pass-through entity] excise payments, current labor market conditions, and strength in retail sales,” Revenue Commissioner Geoffrey Snyder said.
By dollar amount, the areas that produced the greatest growth during fiscal 2022 were income taxes ($4.718 billion more than fiscal 2021), income tax payments with returns and bills ($2.041 billion more than fiscal 2021) and estimated payments ($1.647 billion more than fiscal 2021), DOR said. Each tax type that DOR reports brought in more revenue in fiscal 2022 than it did in fiscal 2021.
Now that DOR has published June and year-end revenue figures for fiscal year 2022, Snyder will begin preparing a report that will detail the revenue cap as specified under Chapter 62F and how fiscal 2022 collections compare to the cap. That report is due to Auditor Suzanne Bump by Sept. 1 and Bump must certify by Sept. 20 whether the state collected revenue in excess of the cap. If she does, then Chapter 62F calls for the excess amount to be returned to taxpayers.
Based on preliminary calculations provided by the Massachusetts Taxpayers Foundation, the excess revenue amount for fiscal year 2022 could be in the neighborhood of $2.233 billion, though previous estimates have ranged as high $3.2 billion.
The Executive Office of Administration and Finance said later Thursday that, after accounting for “$3 billion in automatic tax refunds required under Chapter 62F,” and other transfers, the state will end fiscal 2022 with a surplus of $1.9 billion.