Massachusetts Millionaires Tax Results: Revenue, Schools, Transit

The Massachusetts millionaires tax results are in, and the numbers are much bigger than anyone forecast. The 4% surtax on individual taxable income above $1 million, approved by voters in November 2022 and effective January 1, 2023, generated roughly $3 billion in fiscal year 2025 alone, nearly triple the $1 billion annual estimate backers used during the campaign.¹ Every dollar is constitutionally earmarked for public education and transportation, and after three budget cycles the spending has reached classrooms, community colleges, childcare providers, the MBTA, and road crews across the Commonwealth.²

Revenue Keeps Beating Projections

Fiscal year 2024 brought in about $2.2 billion from the surtax. Fiscal year 2025 came in at a preliminary $2.987 billion, more than double the $1.3 billion the state had budgeted for that year.¹ The Department of Revenue may revise that figure as it finishes analyzing returns.

One reason collections have run so hot: the tax captures big one-time income events like business sales, stock option exercises, and real estate transactions. In any given year, thousands of taxpayers cross the $1 million line because of a single windfall rather than a habitually high salary.

The threshold itself adjusts for inflation each year using the same method as federal brackets, which keeps the tax from quietly pulling in middle-income earners as wages rise. The figures so far:

2023: $1,000,000
2024: $1,053,750
2025: $1,083,150

The 2026 threshold had not been published at the time of writing.²

What the Education Money Paid For

The FY2025 budget sent $750 million in Fair Share revenue to education programs across K-12, early childhood, and higher education.³ Several of the programs did not exist before the surtax passed.

Free School Meals for Every K-12 Student

Massachusetts made universal free school meals permanent, with $172 million committed in the FY2024 budget so that every student in a participating school gets free breakfast and lunch regardless of family income. The state became the eighth to permanently guarantee the program, and districts no longer have to verify eligibility for individual students.⁴⁵

Childcare and Early Education

FY2025 directed $150 million to continue the Commonwealth Cares for Children (C3) grant program, which sends operational grants directly to childcare providers. Another $75 million expanded childcare financial assistance to families earning up to 85% of the state median income, and $21 million went to expanding pre-kindergarten access, starting in Gateway Cities.³

Free Community College

MassReconnect launched first, offering free community college to residents 25 and older who had not previously earned a degree. It received $20 million in FY2024 and $24 million in FY2025 and covers tuition and fees at all 15 public community colleges in the state.³⁶

MassEducate followed, extending free community college to students of any age and income who are pursuing a certificate or associate degree and do not already hold a bachelor’s degree. Eligible students can also receive up to $1,200 for books and supplies based on income.⁷ Between the two programs, the tuition barrier to community college in Massachusetts is effectively gone.

Four-Year Public Higher Education

FY2025 also sent $80 million to MASSGrant Plus, which covers costs for Pell-eligible students and reduces out-of-pocket expenses for middle-income students at state universities and UMass campuses, and $125 million to capital improvements across public higher education campuses.³

What the Transportation Money Paid For

FY2025 directed $550 million in Fair Share revenue to transportation, aimed at problems that had built up through decades of deferred maintenance.³

MBTA

The MBTA received $180 million in FY2024 for capital investments focused on safety and performance, followed by another $60 million in FY2025 targeting the maintenance backlog behind slow zones and service disruptions on the subway and commuter rail. A separate $45 million in FY2025 supported the agency’s low-income fare relief program.³

Regional Transit Authorities

Outside the Boston metro, 15 regional transit authorities handle bus service, paratransit, and other connections. The state committed $375 million to RTA improvements covering fare-free service, connectivity, operational expansion, infrastructure, and community transit for older adults and people with disabilities. As of January 2026, $288 million of that commitment had been distributed, and several RTAs have used the funds to offer fare-free service for the first time.⁸

Local Roads and Bridges

FY2025 added $100 million in supplemental Chapter 90 funding for cities and towns to repair local roads and bridges, plus $24 million directed at rural and regional projects. The largest single transportation line, $250 million, went to the Commonwealth Transportation Fund, which the state estimates will support an additional $1.1 billion in borrowing capacity over five years for larger highway and bridge work.³

Who Actually Pays It

The combined rate on income above the threshold is 9%: the standard 5% Massachusetts income tax plus the 4% surtax. The surtax only hits dollars above the threshold, not your whole income. A taxpayer with $1.5 million in taxable income in 2025 pays 5% on the first $1,083,150 and 9% on the remaining $416,850.⁹²

The piece that catches people off guard is capital gains. The surtax applies to all taxable income above the threshold, including gains from selling a business, investments, or real estate. The federal exclusion for a primary residence sale still applies ($250,000 single, $500,000 married filing jointly), and only the taxable gain after that exclusion counts toward the threshold. But in a state where median home values in many communities top $700,000, a long-time homeowner can trigger the surtax in the year of sale even with modest annual income.²

Installment sales are one planning option. If the payments on a property sale are structured across multiple tax years, only the gain recognized each year counts toward that year’s threshold, which can keep annual income below the surtax line.²

One filing change worth knowing: starting with tax year 2024, married couples who file jointly on their federal return must also file jointly in Massachusetts, barring a specific exception. The rule closes off splitting income across two state returns to stay below the threshold.²

1
Mass.gov. Fiscal Year 2025 Revenue Collections Totaled $43.708 Billion
2
Mass.gov. Massachusetts 4% Surtax on Taxable Income
3
Commonwealth of Massachusetts. Fair Share Investments in Education and Transportation
4
Mass.gov. Governor Healey Joins Legislative Leadership to Celebrate Permanent Universal Free School Meals
5
Massachusetts Department of Elementary and Secondary Education. Universal Free School Meals: FY24 Legislative Report
6
Massachusetts Department of Higher Education. FY25 MassReconnect Guidelines
7
Massachusetts Department of Higher Education. Office of Student Financial Assistance – Free Community College
8
Mass.gov. Fair Share Is Making Public Transit Safer, More Affordable and More Reliable
9
Mass.gov. Massachusetts Tax Rates