By Brooke Thomson
President and CEO

The year 2025 has been unlike any in recent memory for the Massachusetts business community.

Year-end assessments of the state business climate typically focus on Massachusetts-specific issues like taxes, regulation, economic development, energy and transportation. We faced plenty of those issues in 2025 as the commonwealth struggles to remain affordable and competitive. Debates ranged from implementation of a new housing law to proposed legislation that will make energy more affordable while acknowledging that the state will not meet its ambitious 2030 greenhouse-gas emissions goals.

But Massachusetts also felt a heavy gravitational pull from Washington, DC, as fundamental changes in federal policy created uncertainty for growth industries such as health care, research and higher education. The headwinds were unmistakable as the Trump Administration and Congress eliminated some $2.6 billion in federal research grants from hundreds of Massachusetts institutions and hollowed out another $3.7 billion from the state budget.

And that doesn’t even include the potential loss of federal funding for critical transportation projects such as the replacement of the Cape Cod Bridges and the Allston Multimodal project.

The intermingling of state and federal policy created a split-screen economy. On one hand, Massachusetts remains the envy of the other 49 states and a global center of business and commerce. We maintain world-class strengths in education, health care, innovation, advanced manufacturing, defense technology and financial markets. We rank first nationally in eighth-grade reading and math achievement, first in venture-capital funding and second nationally in economic output per capita.

On the other hand, Massachusetts faces a unique set of challenges. The high cost of living and doing business continues to drive companies and working-age employees to lower-cost states. The prohibitive price of housing, energy, health care, transportation and business regulation threatens to drain the lifeblood of talent that makes Massachusetts the most productive state in the nation.

It’s no wonder that the AIM Business Confidence Index in 2025 recorded its longest run of pessimism since the depths of the COVID-19 pandemic.

AIM skillfully adapted this year to represent the interests of member employers at the complex intersection of state and federal policy. Our Government Affairs team did an extraordinary job turning on a dime from tariffs and immigration issues one day to advocating the next day for a state data-privacy bill that would not harm small business.

Here are some key milestones:

• AIM supported a fiscally prudent budget that achieved member goals without any new taxes.  We successfully advocated for tax stability, arguing against 12 proposed new taxes that would have resulted in $379 million in costs to AIM members.
• Governor Maura Healey chose to outline her 2026 economic agenda before more than 500 AIM members in January. It marked the third consecutive year that the governor selected AIM for her annual speech on the economy. She will do so again on January 29, 2026.
• The Legislature approved, and Governor Healey signed, a measure proposed by AIM to create a state small-business ombudsman. The recently passed Fiscal Year 2026 budget creates the ombudsman’s role to help small businesses navigate complex federal and state laws, especially tariffs and other federal policies.
• AIM articulated the concerns of Massachusetts companies as the federal government imposed tariffs that increased costs for businesses and consumers alike. AIM and other business groups met with Governor Healey on April 9 to discuss the potential effect of tariffs on the commonwealth’s important trade relationships with nations like Canada.
• AIM led opposition to a massive, unprecedented and misguided proposal to change the state tax treatment of Global Intangible Limited Tax Income (GILTI). I wrote an op-ed article for The Boston Globe about the measure, which would be the largest tax increase on employers in the state’s history.
• Several hundred AIM members spoke directly with policymakers at 36 AIM events and at 24 policy committee meetings.
• AIM supported Governor Healey’s DRIVE legislation that would provide $400 million in funding to strengthen research and higher education across the Commonwealth.
• AIM spoke for small business as the Legislature debated new rules on the use of consumer data. We commissioned a survey showing that 86 percent of small businesses use non-sensitive data to enhance their marketing efforts while 75 percent use anonymous customer location data to inform business decisions such as where to advertise, find growth opportunities, or open new locations.
• AIM HR Solutions helped hundreds of Massachusetts employers comply with the state’s new wage transparency and equity law. HR Solutions conducted seminars, provided one-on-one coaching and answered questions on the AIM Helpline as companies adjusted to a law designed to eliminate wage discrepancies in the workplace.

Those of us entrusted with this 110-year-old organization remain grateful for the confidence and support of our 3,400 AIM members and the Board of Directors that represents their interests. We look forward to a challenging 2026 and remain hopeful about the fundamental strength and stability of the Massachusetts economic enterprise.