Massachusetts State Income Tax Rates

The credit is available to businesses that provide training to individuals receiving benefits through the Massachusetts emergency housing assistance program. It is available only for tax years during which the emergency housing assistance program is subject to capacity limitations. When you pay more taxes (i.e., withholding taxes or estimated taxes) than the amount of taxes determined to be due an overpayment may be generated on your account.

Massachusetts state tax deductions and credits

• The Personal Exemption, which is supported by the Massachusetts income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses.
• There are a total of 230 local tax jurisdictions across the state, collecting an average local tax of N/A.
• Prepared Food is subject to special sales tax rates under Massachusetts law.
• This means that if your estate is worth more than $2 million when you die, money will be owed to the state before it’s disbursed to your heirs.
• Residents who are 65 or older by Dec. 31, 2024, can receive a $700 exemption on top of the state’s personal exemptions.
• Minimizing Massachusetts estate tax liability requires strategic planning.

Long term gains from the sale or exchange of collectibles is taxed at 12 percent. A long-term capital gain is a profit from selling an asset you’ve owned for more than one year. A short-term capital gain is a profit from the sale of an asset you’ve owned for one year or less. Massachusetts property real estate taxes are calculated by multiplying the property’s value by the location’s real estate tax. The starting point for determining the amount of a taxpayer’s estimated tax underpayment penalty is the amount of tax due for the year, which includes the 4% surtax. See tax year 2023 examples of the application of the surtax for a nonresident taxpayer who participates in a composite Online Bookkeeping return filed by a pass-through entity (PTE).

Property Taxes

This tax applies to all income exceeding $1 million, regardless of filing status, effectively increasing the overall tax rate for high-income individuals. Unlike states that adjust brackets based on inflation, Massachusetts has maintained its flat tax rate for decades, with few adjustments. All nonresident taxpayers with taxable income exceeding the surtax threshold must file a Form 1-NR/PY to report the 4% surtax, even if the nonresident otherwise participates in a composite return. A tax item from Part A, Part B, or Part C can reduce taxable income in another part only to the same extent it is otherwise permitted under the relevant statute. For example, under chapter 62 of the M.G.L., excess Part B losses may be deducted against capital gains attributable to a taxpayer’s trade or business when determining Part A or Part C taxable income. However, once taxable income in each part is determined, a negative amount in one part cannot be used to reduce taxable income in another part when determining the 4% surtax.

Deductions

Details reveal that AV increased in 340 communities and decreased in massachusetts income tax three. The largest percentage increase was in Plainfield (24.1%) while the decrease was in Warwick (2.1%). Proper planning with a tax professional can help mitigate the impact of the millionaire tax while ensuring compliance with state regulations. Massachusetts has some of the highest cigarette taxes in the nation.

Other things to know about Massachusetts taxes

Business purchases for resale are also exempt with the use of a Sales Tax Resale Certificate (Form ST-4) completed by the buyer. Effective for taxable years beginning on or after January 1, 2024, the deduction previously allowed for a deduction of up to $100 ($200 for joint filers) of interest from Massachusetts banks is repealed. Next, check what income you included in your Massachusetts gross income that you’re supposed to deduct on the appropriate Schedule, and then deduct the income.

• Strategies include income deferral, charitable donations, trust planning, and potential relocation to a lower-tax state.
• The standard 5% tax rate remains unchanged, but the MA millionaire tax, introduced in 2023, continues to impact high earners.
• June Sham is a lead writer on NerdWallet’s investing and taxes team covering retirement and personal finance.
• The State of Massachusetts collects $8,110 in state and local tax collections per capita.
• Check the Massachusetts Form 1-NR/PY to learn more.AARP’s Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.
• These include debts owed by the decedent, funeral expenses, and administrative costs.

• The Tax tables below include the tax rates, thresholds and allowances included in the Massachusetts Tax Calculator 2021.
• Massachusetts has a graduated state individual income tax, with rates ranging from 5.00 percent to 9.00 percent.
• All nonresident taxpayers with taxable income exceeding the surtax threshold must file a Form 1-NR/PY to report the 4% surtax, even if the nonresident otherwise participates in a composite return.
• Additionally, when you file an amended return or an abatement application to reduce the amount of tax due, and you previously paid more than what is now shown as due, an overpayment may be generated.
• Exemptions for property tax exist for eligible senior citizens and veterans, religous and philanthropic institutions, and blind individuals.

As tax policies evolve, staying updated on potential legislative changes is crucial for effective financial planning. Massachusetts Online Accounting has a graduated state individual income tax, with rates ranging from 5.00 percent to 9.00 percent. Massachusetts also has a 6.25 percent state sales tax rate and does not have local sales taxes.