Commonwealth of Massachusetts Tax and Non-Tax Revenue

S corporations and partnerships are eligible to make an irrevocable annual election to pay the tax at the entity level. The tax is due and payable on the entity’s original return and is due at the same time as the partnership information return or corporate excise return. The elective tax is limited to taxable years where the federal SALT deduction limitation is effective.

What is not taxed in Massachusetts?

Goods that are subject to sales tax in Massachusetts include physical property, like furniture, home appliances, and motor vehicles. Prescription medicine, groceries, gasoline, and clothing are all tax-exempt. Some services in Massachusetts are subject to sales tax.

If you, your spouse, or your dependent attend a qualifying two or four-year college to obtain a degree, diploma, or certificate, you may deduct any tuition costs that exceed 25% of your Massachusetts AGI. However, the amount of any scholarships, grants, or financial aid that the student receives needs to be subtracted from the total tuition. Kiplinger is part of Future plc, an international media group and leading digital publisher.

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Meanwhile, if you were only able to bring your residence into interim control, defined by the state as temporarily addressing lead hazards, you’re entitled to a credit worth half the repair cost, up to a maximum of $500. Condo owners are also entitled to a credit for repairs done to common areas in addition to the work done in their individual units. Massachusetts allows for other miscellaneous deductions, such as jury duty pay surrendered to your employer, some attorney fees and court costs for unlawful discrimination and other expenses. Military members and spouses transferred to Hanscom are not required to obtain Massachusetts drivers licenses so long as they are not (and choose not to become) Massachusetts residents. However, you must not allow your drivers license (issued from any state) to become invalid or expired. You are a Full-Year Resident if your legal residence (not living on campus) is in Massachusetts and you spend more than 183 days, in the aggregate, in Massachusetts.

Massachusetts State Tax Information

Massachusetts has a 6.25 percent state sales tax rate and does not levy local sales taxes. Massachusetts’s tax system ranks 34th overall on our 2023 State Business Tax Climate Index. If you were a legal resident of Massachusetts and your gross income in 2022 was more than $8,000, you are required to file a Massachusetts income tax return. If your gross income was $8,000 or less, it is optional to file a return, however if you had Massachusetts State Tax withheld, you most likely would want to file a state tax return in order to get your state refund. In this situation, if you do not file you will not receive the refund.

Does Your State Levy a Capital Stock Tax?

Military members and their spouses who are residents of Massachusetts are taxed by Massachusetts on their income, which excludes any BAH and BAS. Military members and their spouses who are not residents of Massachusetts are not required to pay Massachusetts personal income tax. Nonresident military spouses who are employed in Massachusetts should ensure they complete a Form M-4-MS with their employer to establish this tax exemption. A military member’s spouse who has Massachusetts personal income tax withheld, who qualifies for exemption from Massachusetts tax, but did not submit a form M-4 MS must file a Form 1-NR/PY Massachusetts Nonresident Income Tax Return, to claim a refund.

Excise tax on qualified income taxable in Massachusetts at a rate of 5%. Unlike most states which provide a full credit for the PTE, the Massachusetts taxpayers only receive a refundable credit of 90% of the PTE paid. We expect the Department to issue regulations and guidance on the administration of the PTE in the coming weeks. En español | Though the Bay State will charge a surtax for income over $1 million starting with tax year 2023, for now its flat income tax rate of 5 percent puts it in the lower half of the 50 states. The average property tax rate and the sales tax fall in the middle of the pack across all states. By statute, as enumerated in 2002 state law, if certain inflation-adjusted revenue milestones are met, the income tax rate in the state would be reduced.

Lead Paint Removal Tax Credit

For most nonresident students, their Massachusetts source income will be limited to compensation from employment in Massachusetts. Interest or dividends received from Massachusetts banks or corporations will generally not be Massachusetts source income assuming that such items are not connected with a business activity of the student. Scholarship or fellowship grants not requiring the rendition of services should also not be deemed Massachusetts source income as no trade or business is involved. If you earned less than $8,000 during the 2021 tax year, you don’t have to file a Massachusetts tax return. However, you may choose to do so if you want to claim certain tax credits, such as the Earned Income Tax Credit. The state of Massachusetts has a personal income flat tax rate of 5% for everyone who made over $8,000 in 2021, regardless of their filing or residency status.

Why are taxes so high in Massachusetts?

According to the report, Massachusetts's high tax rate is due to the state having the highest median annual income in the country. While the state itself has only the ninth highest state tax income rate, it pays the highest rate in the country in federal income taxes.

The correct mailing address will be printed on your payment voucher. Veterans Administration disability compensation is also not taxed in the state.Spouses of military personnel may be eligible for exemptions. In the Bay State, estates are taxed at rates ranging from 0.8 percent to 16 percent, depending on the value of the estate. A government identification as proof of being a federal government employee. Proof that the employee is traveling at the direction of the federal government during the period of occupancy. This can be provided on agency letterhead or through electronic mail by authorized personnel.

Does Your State Tax Recreational Marijuana?

Chapter 63D of the Massachusetts General Laws, allows partnerships, S corporations, and certain trusts to make an annual election to pay the new PTE Excise at the entity level. The new PTE Excise is imposed at a rate of 5% of the amount of income that is subject to the Massachusetts personal income tax at the individual partner, shareholder, or beneficiary level. For additional information on the PTE Excise election, computation of the excise, and the filing and payment requirements, please contact a member of the SALT team. The deadline to file a Massachusetts state tax return is April 18, 2023, which is also the deadline for federal tax returns.

Massachusetts State Tax Information


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