Billions in state tax refunds to start flowing to taxpayers today, officials say

Eligible taxpayers will receive their refunds on a rolling basis, Governor Charlie Baker’s office said.Luke Sharrett/Bloomberg

State officials said they intend to begin sending taxpayers their share of a $3 billion refund when the calendar flips to November on Tuesday, kicking off a roughly six-week process of doling out checks and direct deposits to millions of taxpayers.

Eligible taxpayers will receive their refunds on a rolling, random basis, Governor Charlie Baker’s budget official said late Friday afternoon. Anyone who has filed a 2021 tax return, and incurred a tax liability, will automatically receive a refund by December 15, officials said.

Individual taxpayers also appear due to receive more than initially projected. Sophia Capone, a spokeswoman for Baker’s budget office, said that eligible taxpayers will receive back roughly 14 percent of their personal state income tax liability from tax year 2021.

The Baker administration had previously said in September that taxpayers could get back about 13 percent — itself a jump from the 7 percent it had initially projected in July. Capone said officials updated the estimate to 14 percent once the income tax extension due date passed on Oct. 17.

The refunds themselves will not be sent out in any “predictable order,” such as alphabetically, Capone said.

The unprecedented return of taxpayer cash came after a windfall of tax collections triggered a 1986 tax-cap law for just the second time in nearly four decades. The checks and direct deposits will land in bank accounts at a time when rising inflation has squeezed families and the prospect of other tax relief flowing from Beacon Hill this year remains unclear.

Friday’s announcement also offered a more concrete timeline for when the state would begin distributing refunds. Baker for months has said taxpayers could start seeing them in November, though he and his aides provided little detail of exactly when.

The 1986 law, known as Chapter 62F, is intended to limit state tax revenue growth to the growth of total wages and salaries and return any excess to taxpayers. State Auditor Suzanne Bump’s office in mid-September certified that number as $2.94 billion, and Baker’s office the next day estimated that roughly 3.6 million taxpayers stood to receive a payment.

State officials have said that to be eligible, taxpayers must have filed a 2021 state tax return by Oct. 17. State officials said someone’s refund could be reduced if they have unpaid taxes, unpaid child support, or other debts.

Even taxpayers who haven’t yet filed returns for last year could still qualify for a refund, according to the Baker administration.

Individuals who have not yet filed their 2021 tax return, but file by September 15, 2023, could still receive a refund, state officials said Friday. Those taxpayers who are eligible will receive their refund approximately one month after they file.

Baker’s budget office said that refunds issued by direct deposit will be labeled “MASTTAXRFD” in a person’s bank account. Those mailed as a check will “include several sentences on the check” explaining both the law and why the recipient is receiving a refund, state officials said. The state has also posted a calculator online where taxpayers could estimate what they stand to receive.

Some of the state’s highest earners stand to be among those who benefit most. The law stipulates that any credit is applied on a “proportional basis,” meaning the more someone owed in income taxes, the higher the refund they’re due.

Some progressive lawmakers made a push last month to change that, filing legislation that would limit what taxpayers could receive to $6,500 and redistribute any excess someone would have received over that amount equally among other taxpayers. The goal, according to state Representative Mike Connolly, the bill’s lead sponsor, was to address what he called an “unconscionable” disparity between what the state’s top earners and some of its poorest could receive.

But Democratic legislative leaders showed little appetite to change the formula before the money began flowing out.

Senate and House leaders are also still trying to negotiate the details of a separate economic development and tax relief package that stalled at the end of the Legislature’s formal session in July.

Despite little public clarity on when a version of that could emerge, Baker said in a radio appearance Thursday that it could come “sometime in the next couple of weeks,” meaning lawmakers could begin moving it before all 200 seats in the Legislature up for election on Nov 8.