MassBudget Responds to Governor Healey’s Proposal to Preserve Hundreds of Millions in State Revenue

"At a time when Massachusetts is facing unprecedented cuts of billions of dollars in federal funding to healthcare, housing, food assistance and other essential human service programs, our state has the opportunity to stand up for its residents and lessen the impact of anticipated funding gaps.

"The Massachusetts Budget and Policy Center (MassBudget) commends Governor Healey for taking an important first step today to preserve critical state revenue in the current fiscal year. The governor has filed a bill that will create a phased-in approach to the five most costly corporate tax changes of the federal “One Big Beautiful Bill Act” (OB3), preventing or delaying hundreds of millions in revenue losses in Fiscal Year 2026 and beyond. 

"For the last several months, MassBudget has advocated for the state to move quickly to opt out of costly federal corporate tax changes passed in OB3 to preserve revenue in a time of great budget uncertainty. Based on available materials from the Executive Office of Administration and Finance, the governor's proposal features two changes that MassBudget has been advocating for since the fall, which can improve the fiscal stability of the Commonwealth. First, corporations would not get tax cuts for research and experimentation investments made prior to tax year 2026. This makes great sense because no tax breaks can incentivize actions in the past. Second, Massachusetts would no longer immediately follow large corporate tax changes made at the federal level, but instead would delay future changes for up to a year when the financial impact of the change exceeds $20 million per year. This would allow lawmakers to consider if and how such a change benefits Massachusetts and whether it should be allowed to enter the state tax code. 

The meaningful changes proposed today by the governor create a foundation on which the Legislature can build and improve. The Legislature can do even more to protect critical revenue resources and ensure our tax code remains equitable. In the coming days, MassBudget will examine the specifics of the governor’s proposal and highlight opportunities for strengthening it. MassBudget will continue to work alongside partners to ensure the Commonwealth has the necessary resources to support our communities as we navigate the fiscal challenges ahead."