Trump’s ‘Big Beautiful Bill’ could cost Mass. nearly $1B in tax revenue, experts say

Massachusetts is expected to lose nearly $1 billion over two fiscal years because of President Trump’s big tax and spending bill signed over the summer, economic experts told state lawmakers Tuesday.

The impact estimate of Trump’s “One Big Beautiful Bill” on fiscal years 2026 and 2027 comes as Beacon Hill lawmakers try to forecast how much tax revenue they’ll have for next year’s budget. Local legislators are also grappling with hundreds of millions of dollars in other funding cuts because of Trump’s executive actions.

State Senate budget chief Michael Rodrigues said cuts in “critical federal funding,” rising health care costs and provisions in Trump’s legislation “have all impacted our state budget and undermined the fiscal integrity of our Commonwealth.”

“We find ourselves amidst a uniquely challenging time when the federal government in Washington continues to hurt us instead of being our partners and helping us,” the Westport Democrat said at the outset of a State House hearing Tuesday.

Massachusetts is projected to lose $664 million in tax revenue in the current 2026 fiscal year under Trump’s bill, according to the state Department of Revenue, and another $282 million in fiscal year 2027, which starts in July.

At the same time, the state is expecting a drop in the annual windfall it’s been getting from the so-called "millionaires tax" — a 4% surtax on incomes over $1 million.

Rodrigues and House budget writer Rep. Aaron Michlewitz are in the first stages of crafting next year’s budget. Before they decide how to allocate money, the two Democrats must come to an agreement with Healey’s budget secretary, Matthew Gorzkowicz, on how much revenue they expect the state to collect from taxpayers next year.

The billions in revenue generated by the 4% surtax, also known as the Fair Share Amendment, approved by voters in 2022, have buoyed key state initiatives in transportation and education at a time when the state has faced fluctuating tax collections.

The Department of Revenue initially forecast the surtax to raise $2.4 billion this year. Snyder said the state is expected to exceed that projection this year by as much as $793 million.

But Snyder said surtax collections are expected to fall in 2027 — by between 1.3% and 10.3% — in part due to what he projects will be a slowing of recent big gains in the stock market.

“We're going to need everything to be firing the right way to see it again in 2027,” he said of collections driven by market gains.

This year’s surtax haul does not help the Healey administration balance the budget. The cash under the voter-approved law cannot be used for that purpose, leaving the governor in a difficult position heading into an election year.

Gorzkowicz, Healey’s budget secretary, said the state’s economy and fiscal standing face “challenges and ambiguity.”

“Like other states around the country, we are also managing through intense spending pressures around health care. We also continue to sort through the impacts of the federal One Big Beautiful Bill,” Gorzkowicz said.