A change in law results in a massive tax levy in December

BOSTON (State House News Service) – December’s tax revenue of $ 4.24 billion broke last year’s record for the last month of the year and exceeds estimates by more than 40 percent, but the windfall is likely temporary, with state revenue officials attributing much of the gains to a change in state law that allows some businesses to avoid federal limits on state and local tax deductions.

The Revenue Department reported on Wednesday that in December 2021, the state raised $ 1.4 billion more than in December 2020 and $ 1.23 billion more than estimates for the month. But DOR has also said much of that money will be returned through refunds. Yet even after adjusting for business tax changes, the department said December tax revenue was $ 520 million, or 18.3 percent, above last year’s tax revenue, and exceeded estimates of $ 635 million.

“Revenue for December 2021 increased in all major tax types compared to revenue for December 2020 and the monthly benchmark for December 2021, including withholding, non-withholding, sales tax and use, corporation and business tax, and “all other” taxes. Said Commissioner Geoffrey Snyder. “The increase in withholding taxes is probably related to improving labor market conditions. ”

Snyder said that many flow-through entities, or companies that pass all income on to owners and investors, have chosen to pay excise taxes at the business entity level, and will then be able to claim credits equal to 90% of tax paid. Members of flow-through entities who have also paid taxes on their estimated business income will also be eligible for refunds.

After factoring in expected repayments, Snyder said that the cumulative collections in FY2022 were $ 2.67 billion higher than in the first six months of FY2021, and they tended to be 1. $ 55 billion, or 10%, above budgeted projections. Sales taxes totaling $ 771 million in December were up 33.5% from a year ago, and the $ 108 million in taxes on meals was $ 27 million more than expected and $ 44 million more than last December.


Source link

About the author