Important Massachusetts tax relief impacting individuals, estates and businesses

On Oct. 4, 2023, Governor Maura T. Healey signed a bill into law which provided the Commonwealth of Massachusetts with its first tax cuts in over two decades. Many taxpayers will benefit from one or more of the provisions within the bill.

Please see below for a listing of key provisions within the new bill, mostly effective January 1, 2023

• An increase in the Massachusetts estate tax exclusion from $1 million to $2 million, along with a credit ensuring only assets more than $2 million are subject to the Massachusetts estate tax.
• Reduction in short-term capital gain rates from 12% to 8.5%.
• Increase in the earned income tax credit from 30% to 40% of the federal credit.
• Rental deduction increasing from $3,000 to $4,000.
• Child and family tax credit – Credit per child in 2023 of $310 is increasing to $440 per dependent on a permanent basis starting in tax year 2024. The credit will no longer be limited to two dependents.
• Additional deduction in relation to commuter transit benefits, i.e., RTA fares, bicycle expenses and public transit fares.
• Increase in the Senior Circuit Breaker Credit from $1,200 to $2,400.
• Title V (Septic) Tax Credit – Increases the maximum credit to $18,000, along with an increase in eligible expenses from 40% to 60%.
• Starting in tax year 2024, married couples will be required to follow their federal filing status. For example, if a couple files married filing jointly federally, they must maintain the same filing status on their Massachusetts income tax return.
• How businesses apportion income will be based solely on sales vs. a three-factor apportionment system based on a portion of sales, payroll and property.

In addition to the above, adjustments were made to credits such as the lead paint abatement credit, apprenticeship tax credit, municipal affordable housing property tax exemption and the stabilization fund cap.

Questions? Please consult with a member of your dedicated engagement team on the impact of any of the above on you or a member of your family or contact us.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.