Massachusetts's voter-approved surtax on income above $1 million generated more than $3.1 billion in fiscal year 2026, with two months still to be counted, according to a May 25 Boston Globe report based on data from the Massachusetts Budget and Policy Center. The result marks a third consecutive year that the so-called Fair Share Amendment has significantly outpaced the roughly $2 billion a year its backers projected when voters approved it in 2022. The surtax applies a flat 4% on top of the state's regular income tax rate for income above a threshold that is now $1.1 million after inflation adjustments.
What changed
Revenue from the surtax has climbed steadily since it took effect for the 2023 tax year: about $1.8 billion in its first partial year of full reporting, roughly $3 billion in fiscal 2025, and now more than $3.1 billion in fiscal 2026. Legislators have responded by increasing planned spending funded by the surtax, with Massachusetts Budget and Policy Center's Phineas Baxandall noting lawmakers now plan to commit $2.7 billion in the coming fiscal year to programs including child-care grants and MBTA transit funding, up from roughly $1 billion in the surtax's first budget cycle.
Who is affected
The surtax directly affects Massachusetts residents, and nonresidents with Massachusetts-source income, whose taxable income exceeds $1.1 million in a given year. Because the threshold applies to total taxable income in a single year rather than net worth, it captures not just habitually high earners but also anyone with a one-time spike, a business sale, a large stock vesting event, or a lump-sum retirement distribution, that pushes them over the line for that year alone. Executives with concentrated equity compensation and business owners nearing a sale are the two groups most likely to hit the threshold unexpectedly, since a single vesting or closing date can determine whether the surtax applies at all for that tax year.
The after-tax math
Example: a Massachusetts resident has $1.5 million of taxable income in a year that includes the sale of a long-held business interest.
| Income component | Massachusetts tax |
|---|---|
| First $1.1 million, at the standard 5% rate | $55,000 |
| Remaining $400,000, at 5% plus the 4% surtax (9% total) | $36,000 |
| Total Massachusetts tax | $91,000 |
Without the surtax, the same $1.5 million would owe a flat $75,000 at the standard 5% rate, so the surtax adds roughly $16,000 in this example, concentrated entirely on the income above the $1.1 million threshold. Because a one-time liquidity event can trigger the surtax even for someone who does not otherwise earn $1 million a year, the timing of large transactions has become a genuine planning variable for Massachusetts residents in a way it was not before 2023.
Moves to discuss with your advisor
- For business owners or executives anticipating a large one-time gain, whether spreading the transaction across multiple tax years, where legally structured to do so, reduces surtax exposure.
- Whether retirement account distributions or Roth conversions can be timed or sized to avoid pushing total income over the $1.1 million threshold in a single year.
- Households considering a change of domicile should weigh the surtax against the full picture of Massachusetts taxes and benefits, not the surtax in isolation, since residency changes carry their own documentation and lifestyle requirements.
- Married couples should have a CPA confirm exactly how filing status affects their exposure to the $1.1 million threshold, since the mechanics differ from the regular Massachusetts income tax brackets.
What to watch
The surtax's consistent revenue overshoot is fueling interest from advocates in other states who see it as a template, according to the Moran Wealth Management analysis, even as opponents point to anecdotal reports of high earners leaving Massachusetts. Whether other states move to adopt similar surtaxes, and whether Massachusetts sees any measurable acceleration in high-income out-migration over time, are the two threads most likely to determine if the Fair Share model spreads beyond Massachusetts. For now, Massachusetts remains the clearest working example of what a millionaires' surtax actually collects once implemented, rather than what backers project before a vote.
Sources
- First reported The 'millionaires tax' was pitched as a $2 billion revenue source. It's blown past that, yet again. — Boston Globe (via Mass. Budget and Policy Center)
- State Millionaire Taxes 2026: A High Earner's Guide — Moran Wealth Management
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