DOR projects range for FY25–26 revenue; assumes SALT cap extension while flagging surtax timing risks

The Department of Revenue told the Joint Committee on Ways and Means on the opening day of FY26 budget work that the commonwealth’s revenue outlook remains uncertain but measurable within a range.

Commissioner Jeff Snyder said FY24 collections totaled about $40.8 billion, with surtax receipts accounting for roughly $2.429 billion of that total. After adjusting for surtax, DOR estimated FY24 non‑surtax collections were about $463 million below its FY24 benchmark. “We estimate that FY24 surtax revenue totaled 2,429,000,000,” Snyder said during his presentation.

DOR presented a range for FY25 non‑surtax revenue of $39.447 billion to $40.063 billion and for FY26 non‑surtax revenue of $40.206 billion to $41.286 billion. With the surtax included, DOR’s FY25 all‑in forecast could be modestly higher than the FY25 benchmark and FY26 could show 1.4%–3% growth over FY25, depending on scenario assumptions.

Secretary Matthew Gerkwitz, speaking for the administration, said the state is monitoring FY25 collections closely and highlighted the administration’s use of recent surtax performance to inform forecasts. “As of October, we are about a $133,000,000 below year to date benchmarks,” Gerkwitz said, noting that DOR will publish November numbers soon.

Committee members pressed DOR on the two largest uncertainties: the fate of the $10,000 federal cap on state and local tax deductions (SALT) and volatile capital‑gains receipts. DOR’s forecasts assume the SALT cap is extended unchanged beyond its December 31, 2025 expiration; staff warned that allowing the cap to expire or change materially would reduce state income tax revenue substantially, partly by eliminating the PTE excise mechanism that has generated roughly 10% of passthrough excise payments that otherwise would have been credited to individual taxpayers.

Committee members also asked whether the surtax collections reflected behavioral change — that is, whether taxpayers were leaving or reorganizing their affairs to avoid surtax liability. Commissioner Snyder said hard migration data come from IRS sources that lag by 18–20 months and that DOR had anecdotal reports from preparers but not definitive migration counts.

The DOR team emphasized timing effects in surtax receipts, noting that payment incentives and collection timing differ year to year — a factor that complicates mid‑year benchmarking and comparisons with prior years. The department recommended continued monitoring and stressed that forecast ranges should guide, not dictate, appropriation planning.

The presentation supplied the committee with the statutory and data context it will use to reconcile administration and independent expert forecasts ahead of the January filing of consensus revenue figures. The committee did not take formal action in the hearing; further technical sessions and monthly collection releases will inform final consensus numbers.