BOSTON — Massachusetts taxpayers will ring in the new year with a tax cut – but a very small one.
The state’s income tax rate drops from 5.25 percent to 5.2 percent on Wednesday. A state law requires an automatic .05 percent reduction in the rate when growth in state revenues exceeds certain benchmarks.
The Revenue Department says tax collections through November were running $766 million, or 9.7 percent, ahead of the same period in the previous financial year.
For most taxpayers, the Jan. 1 reduction will save less than $50 over the course of the year. But it will have an impact on state finances, with officials predicting a $65 million loss in revenue the state would have otherwise taken in for the remainder of the financial year that ends July 1.