There is a message to voters in the spending bill the House plans to pass Wednesday: You can either vote to lower the state's income tax rate this fall, or you can benefit from recent federal tax code changes -- but not both.

Massachusetts automatically conforms to some elements of the federal code, and state officials have said that allowing changes made in the One Big Beautiful Bill Act that President Donald Trump signed July 4 to take effect right away would lead to a $442 million revenue shortfall during the current fiscal year, and more than $250 million in forgone revenue in each of the next two fiscal years.

The House bill (H 5264) largely goes along with Gov. Maura Healey's proposal to delay implementation of the five mostly-corporate tax code changes that have the greatest revenue impact here. But House leadership also added new language that would have Massachusetts permanently decouple from those parts of the federal tax code if the state income tax rate dips below 5% – as would happen if voters this November elect to lower the state income tax rate to 4% – meaning they would never be implemented here.

The proposed ballot question would, over three years, lower the tax rate on personal taxable income (including interest and dividends and personal taxable income other than interest, dividends or capital gain income) to 4.67% for tax year 2027, 4.33% for for tax year 2028 and to 4% starting in tax year 2029. Supporters say the ballot question could save the average taxpayer about $1,300 annually, but legislative Democrats and other opponents say it will reduce state tax revenues by about $5 billion.

"As the Commonwealth continues to navigate Trump's sweeping federal funding cuts, this legislation is an example of the fiscal policy reforms that will be necessary if state revenue collections are reduced at the ballot in November," House Speaker Ronald Mariano and Ways and Means Chairman Rep. Aaron Michlewitz said in a statement. "While this legislation would help soften the blow, budget cuts will be unavoidable should the Commonwealth experience a $5 billion loss in tax revenue, which is why the House will continue to pay close attention to this issue. It is our belief that fiscal responsibility is about more than constrained budgeting – it also means rejecting reckless budget cuts that come at the expense of working people."

Jim Stergios, executive director of the Pioneer Institute and one of the leaders of the ballot question push, said he has never before seen the Legislature tie its own policy decision to a potential decision voters could make in this way.

"It tells me a couple things. One is that they are taking this very personally and not actually looking at the reality on the ground," Stergios said, ticking off stats on the state's anemic job growth since the pandemic compared to other states.

Stergios pointed out that many of the states that have opted against conforming with the federal tax code changes "are high-cost states, many of which are losing population," an ongoing concern for Bay State policymakers. He also said the state budget has grown at a rate twice as fast as median household income over the last 15 years, and that the House is "missing the larger context of 26 states that have lowered their taxes and, after COVID, reined in spending."

"They're taking this very personally and looking at their shoes essentially, and they feel disrespect or something. That's not what this is about and there's no reason to take voters hostage," he said. Stergios added, "I think they're losing sight of the urgency around job creation and affordability, and they ought to get out of the building and stop talking to each other and get a reality check."

Brian Shortsleeve, one of three Republicans running to be the GOP's nominee against Healey this fall, called the House's plan "as outrageous as it gets."

"Speaker Mariano and the House are doing their best Tony Soprano impressions and trying to extort voters: if you lower your taxes, we’ll make sure you pay more somewhere else. That’s not fiscal policy, that’s political coercion, and it’s aimed directly at working families who deserve relief, not threats," Shortsleeve said in a statement.

The Republican candidate for governor said that, if he is elected in November, he will "lower the income tax, deliver real relief like no tax on tips and overtime" on his first day in office. He did not explain how he plans to make that happen unilaterally.

As of 3:30 p.m., representatives had filed 124 amendments to the bill that advanced from the Ways and Means Committee earlier in the day on a 23-8 party-line vote. None appeared to specifically address the tax code conformity issue.

Healey declined to weigh in on the House's approach Tuesday. She said she had not yet looked closely at the House's plan but said she is "really glad to see things moving in the Legislature."

"I will just say that if those ballot questions were to pass, it would be devastating to the Massachusetts economy," the governor said when asked if the tax code changes and income tax rate cut could coexist. Healey has also been vocal in her opposition to the ballot question that would authorize rent control.

Like Healey's proposal, the House bill would spread out Massachusetts's implementation of five key federal tax code changes over two years.

It would allow the section that lets businesses fully deduct domestic research and experimental expenditures in the year those expenses are incurred to take effect as of Jan. 1, 2026 (federal law made it applicable for taxable years beginning after Dec. 31, 2024), allowing companies to take advantage here for the just-started tax year and blunting the state-level impact until fiscal year 2027.

"This was consistently the provision of the OB3 we heard most about from Massachusetts businesses as being important to their future, and it's why we're phasing it in first," Secretary of Administration and Finance Matthew Gorzkowicz told lawmakers last month. 

Massachusetts would conform with the other four tax provisions in the federal law that were expected to reduce state tax revenues starting with tax year 2027 (fiscal year 2028) under the House bill. 

Those sections increase the cap on the deductibility of the interest that a business pays on its debt; increase dollar limits on expensing certain depreciable business assets; activate a special depreciation allowance that lets businesses deduct the full cost of certain production property in the year it is placed in service; and modify federal "opportunity zones" tax credits, according to a Department of Revenue memo from October.

When Healey's implementation delay bill got a hearing before the Revenue Committee last month, co-chair Sen. Jamie Eldridge asked Gorzkowicz why the administration sought a delayed implementation rather than decoupling entirely as New York, Rhode Island and Maine have done.

"We were trying to strike a balance between ensuring that Massachusetts remains competitive with other states, particularly for sectors that are important here in Massachusetts. They may not be as important in Maine, they may not be as important in some other states as they are here," the secretary said. "And so we wanted to make sure that we preserved our competitive advantage, support those industries that are important to our economy, while also insulating and preserving programs and services that might otherwise be impacted from the implementation of these."

Some advocates, many associated with the Raise Up Massachusetts organization, told the Revenue Committee that Healey's bill did not go far enough and specifically asked that the Legislature instead permanently decouple Massachusetts' code from the new federal changes, blocking them from becoming effective here.

[Ella Adams contributed to this report.]