BOSTON – Massachusetts income tax collections have met or exceeded four of five revenue benchmarks required to drop the state’s income tax rate to 5.2 percent from its current 5.25 percent, the Boston Business Journal reported Tuesday.
According to state law, the Bay State’s income tax rate will automatically drop by 0.05 percentage points in a given budget year if collections hit certain targets, and will continue to drop as the targets are met until it reaches a minimum rate of 5 percent.
On Friday, Massachusetts Department of Revenue Commissioner Amy Pitter confirmed that October’s increase in collections had surpassed the state’s minimum growth threshold, marking the fourth tax-growth milestone reached in fiscal year 2013 and in the three-month periods ended Aug. 31, Sept. 30 and Oct. 31.
To hit the fifth and final revenue benchmark, the state must record positive inflation-adjusted baseline growth for the three months ending Nov. 30. The Department of Revenue will report the official collections tally for this period on Dec. 16.
According to the Boston Business Journal report, the 0.05 percentage point drop to a 5.2 percent income tax rate – which would take effect Jan. 1, 2014 – could cost Massachusetts as much as $210 million in lost revenue over an 18-month span.