Massachusetts’ millionaire tax bleeds $4.2b in 2023 as top earners quietly exit
Massachusetts bled $4.2 billion in net adjusted gross income last year, the Internal Revenue Service confirmed Tuesday, as the first full bite of the state’s new 4% “millionaire tax” kicked in. The figure—an 8% jump over 2022—lands even as the total number of departing taxpayers slowed, proof that the wallets now crossing the border are heavier than ever.
The exodus is older than the surcharge
Tax hawks seized on the number as vindication. Pioneer Institute CEO Jim Stergios notes that outbound AGI has topped $4 billion three years running, long before voters OK’d the surtax in 2022. Florida and New Hampshire, both zero-income-tax neighbors, remain the top destinations. What changed in 2023 is the concentration: earners above $200k now account for 70% of the vanished money, nearly double their share in 2019.
Supporters of the levy—expected to haul in $1.3 billion this fiscal year, up 19%—argue the till is still ringing. Massachusetts Budget and Policy Center calls the revenue spike “conclusive evidence” that most seven-figure residents stayed put. Yet the same spreadsheet shows the state lost 36% fewer tax filings overall, meaning each departing return carries a bigger payload. Fewer suitcases, fatter suitcases.
Battle lines harden for november
Three ballot initiatives bankrolled by business coalitions want to claw that momentum back. One would flatten the income-tax rate from 5% to 4%; another would cap annual revenue growth. Governor Maura Healey has already branded the first idea a “multimillion-dollar hole” in a budget that funds transit and K-12 classrooms. Expect the ad war to start this summer, with both sides brandishing the same IRS tables.
Silicon Valley and Seattle are watching. California is mulling a wealth tax; Washington’s new capital-gains levy just survived its first legislative session. If Massachusetts can keep its golden geese while milking them, progressive states get a playbook. If the AGI drain accelerates in 2024, tax-cut campaigns from Boston to Sacramento write themselves.
The data dump is silent on one metric: how many millionaires left too late to dodge the surcharge, then filed non-resident returns mid-year. The IRS won’t know until 2025. By then Massachusetts will either be the proof that taxes and talent can coexist—or the cautionary tale carved into every anti-tax bumper sticker from here to Miami.