A hair trigger for automatic tax refunds

State tax revenues bounce around a lot. When the economy is strong, receipts can spike; in a downturn, they can collapse.

Massachusetts has a variety of strategies to deal with these fluctuations, including a provision that automatically sends money back to taxpayers when collections surge.

This automatic-refund rule, named Chapter 62F after its place in the state's legal code, was passed via a 1986 ballot initiative. But in its 40-year history, it has only been triggered twice, once at the outset and then again during the Covid-era bull market.

A proposed 2026 ballot question would adjust the rules for 62F, greatly increasing the regularity of automatic tax refunds but also adding a new source of instability to the state tax system.

We at the Center for State Policy Analysis are committed to helping voters understand the likely impact of this and all state ballot questions.

In this report, we show how the proposed adjustments to 62F would have worked in the past, how they're likely to operate in future, the risky staccato effect of the new rules, and their potential interaction with another ballot question that would cut the income tax.

We find that:

• This ballot question would dramatically increase the frequency and scale of 62F refunds, triggering 3–5 times as many refunds and returning 5–15 times as much money to taxpayers.
• One reason refunds have been rare under current law is because the state has cut its tax rates over time, effectively swapping policy-driven refunds for automatic ones.
• By increasing the size and frequency of 62F refunds, this ballot question reduces revenue as much as an income tax cut of roughly 0.4 percentage points. This downward pressure on revenues stems from the asymmetry of 62F, which provides refunds in good times but doesn't require additional payments in bad times.
• The ballot question has a timing problem that creates a risky feedback loop in the tax system, encouraging refunds every other year and triggering 62F in periods of weak revenue growth.
• Because the tax cut is relatively small compared to household incomes, it is unlikely to have a significant impact on private spending or the overall state economy.
• Under the ballot question, millionaires tax revenue would newly count towards 62F, but this would have a negligible effect on actual refunds.