Massachusetts House Bill H5407

Massachusetts 2025-2026 Regular Session

• Introduced: 5/7/26

Caption

REPORT of the SPECIAL JOINT COMMITTEE on INITIATIVE PETITIONS on the INITIATIVE PETITION of JAMES JOHN STERGIOS AND OTHERS FOR THE PASSAGE OF AN ACT RELATIVE TO REDUCING THE STATE PERSONAL INCOME TAX RATE FROM 5% TO 4%. (see House, No. 5007)

Summary

H5407 is a report from the Special Joint Committee on Initiative Petitions concerning two related ballot initiatives: one to limit state tax collection growth and return excess revenues to taxpayers, and another to reduce the Massachusetts personal income tax rate from 5% to 4%. Because these are initiative petitions under Article 48 of the Massachusetts Constitution, the Legislature may only approve or reject them as submitted; it cannot amend them. The committee held public hearings, reviewed testimony from proponents, opponents, experts, and members of the public, and issued a majority report recommending that the General Court take no action on both petitions. The report argues that the proposals would significantly reduce state revenues, weaken the Commonwealth’s fiscal stability, and limit the state’s ability to respond to recessions or replenish reserves. It highlights projected revenue losses from the income tax cut, estimates that the benefits would be concentrated among higher-income taxpayers, and warns that changing the Chapter 62F revenue cap formula could increase the likelihood of taxpayer refunds after economic recoveries, further constraining state budgeting and the stabilization fund.

Impact

If adopted, the petitions would amend Massachusetts tax law by lowering the personal income tax rate from 5% to 4% and changing the Chapter 62F revenue growth limit formula to include Fair Share Amendment revenues and alter the cap calculation. The report states these changes would reduce state revenue collections, affect the timing and amount of taxpayer refunds, and potentially reduce funding available for local aid, education aid, roads, bridges, safety net programs, and the state stabilization fund. The report itself does not change the law; it recommends legislative inaction on the petitions.

Sentiment

The overall sentiment in the committee report is negative toward the petitions. The majority concluded that the proposals would harm the Commonwealth’s fiscal resilience and disproportionately favor high-income earners over lower- and middle-income residents. The report acknowledges that proponents emphasized tax savings, but the committee’s discussion and findings frame those savings as limited for most taxpayers and outweighed by the broader budgetary risks.

Contention

The main point of contention is whether the tax cuts and revenue-limiting measures would provide meaningful relief to ordinary taxpayers or instead primarily benefit wealthy residents while undermining public finances. Supporters pointed to projected tax savings, while opponents and the committee majority emphasized large revenue losses, reduced reserves, and the risk of funding cuts to essential services. Another disputed issue is the Chapter 62F formula change: supporters view it as a taxpayer protection mechanism, while critics argue it would make revenue refunds more likely after downturns and recovery years, reducing the state’s flexibility in managing economic cycles.