December Tax Dip Worries State Budget Makers

Katie Castellani |SHNS

State tax collections last month dropped by $285 million or 6.6% compared with December 2024, a shift that tightens the state budget margin for error halfway through the fiscal year.

Revenue collections for the month totaled $4.062 billion, also falling $167 million or 4% below the state’s benchmark, the Department of Revenue reported Tuesday.

The state collected about $19.636 billion through the first half of the fiscal year, representing modest growth of $375 million or 1.9% higher than collections in the same period last year. The haul was roughly on par with the year-to-date benchmark, landing at 0.1% or $23 million higher.

DOR Commissioner Geoffrey Snyder said there were decreases last month in non-withholding income taxes as well as corporate and business taxes and “other" taxes. These decreases were partially offset by a rise in withholding income tax and sales tax. He attributed the decline in non-withholding income, corporate and business taxes to a decrease in estimated and return payments and an “unfavorable increase” in refunds. The decrease in “all other” tax is mainly because of a decrease estate taxes, which tends to fluctuate, he said.

Historically, about 9.5% of annual revenue on average is received in December, according to DOR. Many corporate and business taxpayers must make quarterly estimated payments during the month and some quarterly personal income tax estimated payments, which are due Jan. 15, come in December.

The Healey administration is managing the fiscal 2026 budget and getting ready this month to introduce its fiscal 2027 spending plan. Snyder told top budget writers in December during the annual revenue forecasting hearing that DOR expects tax revenue growth in fiscal 2027 to land between 1.7% and 3.1%.