The Massachusetts Taxpayers Foundation (MTF) projects Fiscal Year (FY) 2026 non-surtax revenues to fall $73 million below the FY 2026 benchmark, ending the year at $41.14 billion. FY 2027 non-surtax revenues are projected to grow $884 million or 2.2 percent to $42.03 billion, providing minimal cushion for either budget.

Slower growth in FY 2026 and FY 2027 tax revenues is largely due to a slowing economy, flat employment, and financial strains on budgets that limit growth in personal expenditures. While MTF’s forecast adjusts for the impacts of federal tax law changes included in the “One Big Beautiful Bill Act” (OBBBA), it is the risks and uncertainties to the broader economy and the potential loss of federal funds that could make this one of the most challenging budgets since the 2009 fiscal crisis.

Following $2.99 billion in FY 2025 income surtax collections, MTF projects surtax revenues of $2.66 billion in FY 2026, which would be $325 million less than FY 2025 but $260 million higher than the FY 2026 benchmark. MTF expects surtax revenues will grow to $2.8 billion in FY 2027.