Sam Drysdale
State House News Service

The state's top tax officials estimate an income tax cut being pushed toward the 2026 ballot could have a $4.8 billion annual impact on state revenue collections, a cost Democratic budget chiefs argue renders the proposal "irresponsible."

The estimate emerged during an annual revenue forecast hearing and as lawmakers and experts gathered to assess economic and other conditions that will influence their decisions on spending and affordability issues. 

In opening remarks, the Massachusetts House Ways and Means chairman, state Representative Aaron Michlewitz (D-North End), said pending ballot questions could collide with uncertainty in the state budget and force painful tradeoffs.

The Massachusetts Department of Revenue told lawmakers that a proposal to reduce the state income tax rate from 5 percent to 4 percent would shrink annual revenues by between $4.2 billion and $4.8 billion. While the state would lose the ability to spend that money on government services, supporters of the ballot question say it would go back into taxpayers' pockets at a time when the cost of everything is up. The estimate adds fuel to intensifying debates over affordability, spending priorities, and the role of voters in reshaping policy.

"We're in the middle of still implementing ... the $1 billion tax cuts that we passed in 2023," Michlewitz said after the hearing, referring to the relief package lawmakers approved two years ago. He ticked through a list of pressures facing the state — from federal funding cuts to skyrocketing health care costs — before zeroing in on the proposed income tax cut.

"To throw a ballot initiative in there, that is going to cost, as the commissioner stated, somewhere between $4 to $5 billion. It's significant — will have a significant impact on our economy," Michlewitz said. "I use the term irresponsible, and I just think it's an irresponsible step to be taking at this point in time."

A Suffolk University/Boston Globe poll in November found nearly 67 percent of respondents support the plan to reduce the income tax rate to 4 percent, with just more than 23 percent opposed. 

The income tax cut is one of two tax-related ballot questions on track for 2026. The other would revise the state revenue cap law to make it easier to trigger taxpayer refunds. Business groups backing the initiatives argue they would deliver meaningful relief to residents struggling with high costs of living.

Jim Stergios, Pioneer Institute executive director and campaign manager for the two ballot questions, said he wouldn't comment on legislators calling the cut irresponsible beyond offering "a few facts."

"Over the past 6 to 7 years, the state budget has grown by well over 50%, while household income has not kept up — not by a long-shot. In real terms, media[n] household income is up 13% over the last 15 years — the state budget has instead grown 28%," he said. "With talent and investment leaving the state, we believe taxpayers need someone to think about how we make it easier to afford Massachusetts. That’s why residents of all parties, at all income levels — and why even union members — support this by a large margin."

The state Department of Revenue's estimated impact on revenue "totally ignores past history," Stergios said. 

"We’ve done this before, and, if history is any guide, the impact on revenues will be far less. And, responsibly, we’ve proposed to implement the one percent cut over three years, in one-third-of-one-percent increments," he said.

Massachusetts Senate Ways and Means chairman Michael Rodrigues (D-Westport) aligned himself closely with Michlewitz's concerns, pointing to the Legislature's incremental approach to tax relief over the past two decades.

"I mirror his concerns, almost verbatim," Rodrigues said. "When I was first elected to the Legislature, income tax rate was 6.25 percent, we've managed it down to 5 percent, we've been very responsible with the way that we manage our tax reductions. Referendum questions are not the way to bluntly change tax code, and so I'm absolutely opposed to the reduction in income.”

Secretary of Administration and Finance Matthew Gorzkowicz emphasized the scale of the potential hit outlined by the state Department of Revenue, especially so soon after the state enacted what he touted as the largest tax cut in a generation.

"We passed the largest tax cut in the last 20 years," Gorzkowicz said. "Certainly pulling out what we've heard today through testimony from DOR, almost $5 billion from our budget would have a significant impact on programs and services, so nothing to be taken lightly."

A reporter asked Michlewitz if he would be open to striking a bargain with ballot question backers.

"We're open to those conversations. We're open to trying to find a better way to grow our economy," he said. But he questioned whether a flat income tax cut would meaningfully improve Massachusetts's competitiveness. 

"I don't think a 5 percent income tax versus a 4 percent income tax is going to put us in any different standing in competitiveness to other states," he said.

Republicans seized on Democratic criticism as evidence of misplaced priorities. Mike Kennealy, a Republican candidate for governor in 2026, blasted Michlewitz for labeling the ballot questions irresponsible.

"The only thing 'irresponsible' here is Beacon Hill’s addiction to overspending," Kennealy said. "Calling direct tax relief for working families irresponsible — after Democrats blew through their own budget by more than $6 billion — is breathtakingly out of touch."

Kennealy framed the proposals as a necessary check on government growth, not a fiscal gamble.

"Massachusetts doesn’t have a revenue problem — it has a failed leadership problem," he said. "Letting taxpayers keep more of their own money isn’t reckless — it’s common sense."

With billions of dollars and competing visions of fiscal responsibility at stake, the state Department of Revenue estimate ensures the tax-cut debate will loom large as lawmakers head toward the next election cycle.