March tax collections beat expectations by $101 million or 2.5%, and state tax revenues through three-quarters of the budget year are running $786 million ahead of benchmark, primarily driven by surtax and capital gains tax collections.

The Department of Revenue said Thursday the $4.193 billion collected last month was $127 million or 3.1% more than total collections in March 2024 and put the state’s year-to-date tax take for fiscal 2025 at $29.681 billion. That’s $2.149 billion or 7.8% more than actual collections during the same nine-month period of fiscal 2024, and $786 million or 2.7% above the year-to-date benchmark.

DOR said a “significant portion” of the year-to-date above benchmark performance is likely driven by surtax and capital gains tax collections. Surtax revenue is supposed to be spent only for transportation or education purposes and capital gains tax revenue flows into state savings after hitting a certain threshold.

Revenue Commissioner Geoffrey Snyder said March, which is a middle-of-the-road month for its revenue impact, saw increases compared to March 2024 collections in “all major tax categories.”

The $43 million or 2.2% increase in withholding “reflects current labor market conditions” while the $22 million or 48.3% increase in non-withholding income tax is due, in part, to “passthrough entity excise payments and a likely increase in capital gains tax collections, partially offset by an unfavorable increase in refunds,” Snyder said. The commissioner said almost flat sales and use tax collections “probably reflect the impact of declining consumer confidence and the lingering impact of past inflation.”

The $30 million or 2.4% increase in corporate and business taxes “is driven by an increase in payments with returns and bills and a favorable decrease in refunds, partially offset by a decrease in estimated payments,” Snyder said. He attributed the $27 million or 15.4% increase in the 'all other’ tax mostly to “an increase in the premium tax on excess and surplus lines insurance policies, a category that tends to fluctuate.”

April is the most significant month for state tax collections and the month’s results can have a major influence on the state budget. Not only is it the month that generally contributes the greatest share of tax revenue, but it comes as the fiscal year wraps up and budget management decisions are more limited.

The Healey administration has set April’s monthly benchmark at $5.722 billion, which would be $605 million less than what was collected in April 2024. DOR is due to report April revenues by Monday, May 5.