Governor Healey has signed into law H.4104, An Act to Improve the Commonwealth's Competitiveness, Affordability, and Equity, aimed at providing tax relief for residents and businesses.
Below, please find a summary of measures included in the final legislation as signed into law. Click here to access the complete text of the legislation.
Single Sales Factor
- Moves Massachusetts from a sales tax apportionment system that factors in property, payroll, and sales to an apportionment that only considers sales, thereby removing a disincentive for Massachusetts companies to hire or grow in-state and making it more attractive for companies to headquarter in Massachusetts.
Commuter Transit Benefits
- Makes public transit fares, as well as ferry and regional transit passes and bike commuter expenses, eligible for the commuter expense tax deduction.
Housing Development Incentive Program (HDIP)
- Increases the statewide cap from $10 million to $57 million one-time, and then to $30 million annually.
Local Option Property Tax Exemption for Affordable Housing
- Permits municipalities to adopt a local property tax exemption for affordable real estate that is rented by a person whose income is less than a certain income level set by the community.
Senior Circuit Breaker Tax Credit
- Doubles the maximum senior circuit breaker credit from $1,200 to $2,400, impacting approximately 100,000 seniors.
Earned Income Tax Credit
- Increases the earned income tax credit from 30% to 40% of the federal credit, impacting approximately 400,000 taxpayers with incomes under $60,000.
Low Income Housing Tax Credit
- Raises the annual authorization from $40 million to $60 million.
Title V Cesspool or Septic System Tax Credit
- Triples the maximum credit available from $6,000 to $18,000 and increases the amount claimable to $4,000 per year, easing the burden on homeowners facing the high cost of septic tank replacement or repair.
- Reduces the estate tax for all taxpayers and eliminates the tax for all estates under $2 million by allowing a uniform credit of $99,600.
- Increases the cap on the rental deduction from $3,000 to $4,000, impacting approximately 800,000 renters across the Commonwealth.
Short Term Capital Gains
- Reduces the tax rate on short-term capital gains from 12% to 8.5%.
Child and Dependent Tax Credit
- Increases the tax credit for a dependent child, disabled adult, or senior from $180 to $310 in taxable year 2023, and then to $440 in taxable year 2024 and beyond, per dependent, while eliminating the child/dependent cap.
- This expanded credit will impact approximately 565,000 families.
Additional Tax Changes
Senior Property Tax Volunteer Program: Increases from $1,500 to $2,000 the maximum that municipalities may allow for certain seniors to reduce from their property tax by participating in the senior work-off program.
Lead Paint Abatement: Doubles the credit to $3,000 for full abatement and $1,000 for partial abatement.
Dairy Tax Credit: Increases the statewide cap from $6 million to $8 million, to provide more assistance for local farmers during downturns in milk prices.
Student Loan Repayment Exemption: Ensures that employer student loan payments are not treated as taxable compensation.
Apprenticeship Tax Credit Reforms: Expands the occupations for which this workforce development credit is available.
Cider Tax: Raises the maximum amount of alcohol for these classes of drinks to 8.5%, allowing more locally produced hard cider and still wines to be taxed at a lower rate.
Chapter 62F: Requires payments made if Chapter 62F is triggered to be paid out equally amongst taxpayers.
Married Taxpayers Filing Jointly: Requires married taxpayers who file a joint return with the federal government to file a joint state return, subject to exemptions or adjustments promulgated by the Department of Revenue.
Click here to access the complete text of the legislation.