How does the State Income Tax Affect Nonprofits?

In 2008, several conservative taxpayers associations advocated for a repeal of Massachusett’s 5.3% income tax. This repeal would have cost the state $11 billion in tax revenue.

While it would have had a very negative impact on nonprofits, many of which heavily rely on state funds, it would have had a more dramatic impact on education, infrastructure, social services, and all other publicly-funded sectors of the economy, and likely would have led to an increase in property and sales taxes.

With the lobbying efforts of the MNN and our drive to communicate the importance of public funds to the general public, over two million Massachusetts citizens turned out to vote against the repeal, defeating the motion in a landslide victory. Despite the warnings of the repeal’s advocates, the income tax level has remained steady, and the public sector and social service industries remain very important parts of the state’s economy. The nonprofit sector alone employs 14.6% of Massachusetts workers, more than the entire public sector, and total employment in the health and education services make up nearly a quarter of the entire workforce.