Massachusetts’ so-called millionaires tax appears primed to hand lawmakers another billion-dollar surplus, if not more.
With two months left in the fiscal year, the voter-approved surtax has generated $2.6 billion in revenue, Healey administration officials said, already topping what the state collected all of last year when the tax produced a hefty surplus.
The estimated haul, disclosed in a Tuesday letter, is nearly double the $1.3 billion that Governor Maura Healey and state lawmakers agreed to spend in surtax revenue this fiscal year. The revenue total is also expected to grow further after collections flow in for May and June.
Most of the additional money raised would go to a reserve account, from which state policymakers can pluck money for one-time investments into projects or programs.
The amount of millionaires tax revenue collected this year was already expected to be significant, particularly after total tax revenues surged above projections in April on the back of collections from the millionaires tax and capital gains.
But cash from the surtax is already topping what Healey administration officials roughly expected to collect for the entire fiscal year. The surge underscores both the surtax’s potential as a major revenue driver and the ongoing difficulty state officials face in predicting exactly what it will deliver.
Last year, state officials initially said the surtax generated $2.2 billion in revenue. But they later revised that to $2.46 billion, helping create the roughly $1.3 billion surplus that lawmakers are now debating how to spend. The House and Senate have each passed different earmark-laden versions of legislation doling out that money, the differences of which they’re expected to negotiate in the coming weeks.
The state’s Department of Revenue won’t certify the official amount raised from the surtax for this fiscal year for several months.
Voters approved the tax in 2022 to levy an additional 4 percent tax on annual earnings over $1 million. At the time, the Massachusetts Budget and Policy Center, a left-leaning think tank, projected it could generate at least $2 billion a year.
The cash it’s produced has regularly blown past even that. The tax generated $1.5 billion between February and April of this year alone, according to state officials.
That surtax is “highly responsive” to how the stock market and economy are performing, said Doug Howgate, president of Massachusetts Taxpayers Foundation, a business-backed budget watchdog. That makes it a “moving target” for state officials, and a difficult one to predict as the country slides into an uncertain fiscal future.
The national economy shrank in the first quarter, the first decline in three years, feeding into some economists’ concerns that a recession could be looming. President Trump has already withheld or cut billions of dollars in federal grants and other spending, and companies are warning customers that prices could rise because of a US-driven trade war.
“The concern next year,” Howgate said, “is that we’re not using this [surtax money] for sustained recurring resources. . . . It certainly looks like we’re in a different stock market world now than we were 12 months ago.”
A huge millionaires tax surplus also doesn’t automatically mean the state is enjoying a healthy fiscal picture. State officials have treated money from the surtax separately from other types of tax collections because under the state Constitution, the surtax revenue can only be spent on education and transportation.
And despite ending last year with extra surtax money, officials still had to close a budget deficit. Healey already said she’s freezing hiring for much of state government later this month, citing “widespread economic uncertainty at the national level.”
Matt Stout can be reached at matt.stout@globe.com. Follow him @mattpstout.