State’s income tax rate sees slight reduction for 2019

The gears are moving on Beacon Hill for a meager cut to the state’s income tax after booming receipts last year triggered the first of five steps to deliver relief to taxpayers.

An 8.9 percent jump in tax collections triggered the first of five steps to deliver a slim 0.05 percentage point cut in the income tax to 5.05 percent in January 2019, according to the Department of Revenue. Income is currently taxed at 5.1 percent.

The impact on wallets will be slight, with the change saving taxpayers just $5 on every $10,000 of taxed income.

In 2000, Massachusetts residents voted overwhelmingly through a ballot measure to slash the state’s tax rate to a flat 5 percent over three years from the 5.98 percent it was then. Lawmakers responded in 2002 with a complicated series of triggers that would need to take place before the rate could fall.

The first of those triggers — an increase of at least 2.5 percent in inflation-adjusted tax collections — was met last year. After inflation, collections were up 5.5 percent.

The $2.1 billion boost in tax income has been attributed largely to broad economic gains and excess collections stemming from federal tax cuts.

Paul Craney of the Massachusetts Fiscal Alliance said taxpayers have waited a long time for the cut because lawmakers have little interest in seeing any reduction in revenues.

“It’s a rigged system because the Legislature doesn’t want to comply,” Craney said. “They have a spending addiction, and they have no desire to break it.”

For the income tax cut to go into effect in January, state officials need to see — in each of the next four months — no decrease in state revenues for the prior three months.

While the tax cut will have a slim benefit for taxpayers, it will cost the state $84 million for the second half of this fiscal year if it takes effect in January.

Beacon Hill budget writers incorporated the tax cut into the current year’s spending plan.