BOSTON (AP) — Massachusetts taxpayers will be enjoying a small income tax cut in the new year.
Gov. Charlie Baker’s administration announced Tuesday that all requirements have been met to automatically reduce the income tax rate from 5.15 percent to 5.1 percent, effective Jan. 1.
A 2002 state law requires the income tax rate be reduced by 0.05 percent each year that the state meets certain requirements for tax revenue growth. The rate could continue to fall in future years until it hits 5 percent.
Baker said in a statement that the tax cut is a sign that the state’s economy remains strong.
The reduction is expected to cost the state $74 million over the next six months and was anticipated in the state budget approved for the fiscal year ending July 1.
“Allowing citizens across the Commonwealth to keep more money in their pockets will allow the state’s economy to continue growing in 2016,” said Baker.
“The will of the voters has persevered,” said Lieutenant Governor Polito. “It’s been 15 years since the voters first made this decision and every chance we get to provide more discretionary income is a good day for the Commonwealth and the taxpayers.”
“The fiscal year 2016 budget revenue assumed effects of the lower tax rate to 5.10% and has been accounted for in the balance sheet,” said Kristen Lepore, Secretary of the Executive Office for Administration and Finance. “This is good news for the taxpayers with no new impact on the state’s fiscal outlook.”
