Two years ago, when Massachusetts passed a 4 percent surtax on income over $1 million, critics said high earners would pack up and leave the state.
But as former U.S. Labor Secretary Robert Reich pointed out on X, “When Massachusetts passed a ‘millionaires tax’ in 2023, conservatives claimed the rich would flee. But two years later, they haven’t — and MA has collected $5.7B for infrastructure and public education.”
According to the Boston Globe, the so-called millionaires tax brought in nearly $3 billion in the past fiscal year alone, far surpassing the state’s $1.3 billion projection.
In total, Massachusetts has collected $5.7 billion from the tax since it went into effect in 2023.
That money is constitutionally earmarked for transportation and education, which state leaders say are already benefiting.
A New Kind of Mayor in New York
While Zohran Mamdani has been a vocal advocate for taxing the rich in his own state, his name has also become a shorthand target for critics warning about the supposed dangers of such tax policies.
In Massachusetts, similar fearmongering was used to argue that the wealthy would flee if the surtax passed. That didn’t happen.
Mamdani, a 34-year-old Democratic Socialist and state assemblymember from Queens, is now the mayor-elect of New York City after defeating former Gov. Andrew Cuomo and Republican Curtis Sliwa in one of the city’s most closely watched races.
Mamdani’s win is historic: he will be New York’s first Muslim mayor, the first of South Asian descent and the first born in Africa, and the youngest to take office in more than a century.
His grassroots campaign, focused on economic fairness, housing, and taxing millionaires, overcame a flood of billionaire spending aimed at stopping him.
“Billionaires like Bill Ackman and Ronald Lauder have poured millions of dollars into this race because they say that we pose an existential threat,” he told supporters at an October rally.
“And I am here to admit something. They are right. We are an existential threat to billionaires who think their money can buy our democracy.”
State Revenue Exceeds Expectations
State officials confirmed in August that Massachusetts ended the last fiscal year with $2 billion more in tax revenue than expected and nearly $3 billion more than the previous year.
That was largely due to the millionaires tax and a boost from capital gains taxes.
Even after removing the surtax and capital gains revenue from the total, the state still brought in $52 million above expectations.
According to Massachusetts Department of Revenue Commissioner Geoffrey Snyder, the revenue bump was “partially offset by a decrease in the corporate and business tax,” which fell short by $355 million.
Total revenue for fiscal year 2025 came in at $43.7 billion, a 7.1 percent increase over the previous year. Income and sales tax revenues held strong, helping to create a modest budget surplus.
This marks a major improvement from last year, when the state closed the books with a $233 million deficit.
Doug Howgate, president of the Massachusetts Taxpayers Foundation, said, “Starting the fiscal year having met revenue targets puts you in a slightly sounder place than was the case last year at this time.”
Federal Policy Still a Wild Card
Still, the state’s outlook isn’t entirely rosy. President Trump has slashed billions in federal grants and signed a sweeping $4.5 trillion tax cut bill.
According to Governor Maura Healey’s administration, those moves are expected to result in hundreds of thousands of Massachusetts residents losing health coverage.
Healey has already taken steps to prepare for a potential downturn. She cut $130 million from the 2026 budget, froze executive branch hiring, and paused a planned 2 percent raise for thousands of state managers.
She’s also asked lawmakers for expanded authority to make further cuts if needed.
A Clear Lesson for Other States
But despite the fiscal uncertainty at the federal level, Massachusetts’ millionaires tax is proving that bold state-level policy can deliver real results.
As Reich said, it’s a reminder that “positive change can still happen at the state level.”