Massachusetts’ most sweeping and comprehensive tax bill in decades has just been signed into law by Governor Healey. The Tax bill, referred to as the $1 Billion Dollar Tax Package, will provide $561 million for tax relief for the fiscal year 2024 and is expected to grow to a total impact of more than $1 billion by 2027. Though it’s impact is expected to be far-reaching, the bill is anticipated to most benefit low to moderate-income individuals and the business community. Here are some of the bill highlights:

Overview

- Child and Dependent Tax Credits: Two existing child and dependent tax credits would be combined so as to allow taxpayers to eventually claim up to $440 per qualifying dependent in 2024.

- Senior Circuit Breaker Tax Credit: Low and middle-income seniors who rent or own their home could claim a $2,400 credit, doubling what they currently claim.

- Rental Deduction: the deduction for renters increases from the current $3,000 to $4,000.

- Earned Income Tax Credit: An expansion of the earned income tax credit could save people anywhere from a few dozen to several hundred dollars.

- Short Term Capital Gains: The tax rate on short-term capital gains — profits on investments held up to a year – would be cut from 12% to 8.5%. 

- Estate Taxes: The tax bill also provides some estate tax relief by reshaping the estate tax, hiking the threshold at which the tax kicks in from $1 million to $2 million per individual. Under the bill, an estate of $2 million would receive a uniform credit of $99,600.

Estate Tax Impact

With the estate tax threshold now doubled, the first two million dollars of every Massachusetts resident’s estate will now be exempt from the estate tax, effectively erasing the estate tax burden for estates valued at two million dollars or less. Given the magnitude of this change, it’s essential for Massachusetts residents to take full advantage of the benefits of this legislation. This is where estate planning steps in. Through strategic estate planning, you can maximize your potential savings so that your money can go towards what matters most to you.