Massachusetts Lawmakers Unveil $1B Tax Relief Package

Massachusetts lawmakers unveiled a sweeping new tax package yesterday. The compromise tax reform package, expected to win House and Senate approval this week, combines relief for Massachusetts seniors, renters, caregivers and low-income families. Some of the proposed changes include:

• Increases child tax credit from $180 to $310 in fiscal year 2023, then again to $440 in fiscal years 2024 and beyond.

• Increases the Earned Income Tax Credit from 30% to 40% of the federal credit, double the seniors’ tax credits from $1,200 to $2,400 and increase the cap on rental deduction from $3,000 to $4,000.

• Provides a uniform estate tax credit of $99,600, which would effectively double the threshold at which the levy kicks in from $1 million to $2 million.

• The accord would also slash the tax rate on short-term capital gains, which stem from the sale of assets held for a year or less, from 12 percent to 8.5 percent.

• Another change aimed at businesses would overhaul how Massachusetts calculates taxes owed by multistate companies. Currently, the apportionment system factors in property, payroll and sales, and the bill would replace that with a simplified version that uses only a company's sales.

• The conference committee accord would change Chapter 62F, the 1986 initiative petition law that caps the amount of tax revenue state government can collect each year and requires taxpayers to be reimbursed for any overage. The bill would replace the proportional system with an equal payment for every single taxpayer if Chapter 62F were triggered again, regardless of how much they paid in taxes that year.

• The bill would also require married taxpayers who file a joint return with the federal government to file a joint return at the state level as well.

Your Stone team will continue to monitor developments as they occur. Please contact us for more information on these important tax law changes.

Diane West is a tax director at Stone & Company and oversees tax and advisory services at the firm. Stone & Company, LLC is a CPA firm based in Lexington Massachusetts. 

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