Massachusetts State Tax

There are only two tax rates in Massachusetts as well as some unique Massachusetts state tax laws. Even if you only have partial or nominal income in Massachusetts, it is important to understand Massachusetts state tax law, to avoid potential penalties.

Massachusetts state sales tax – 6.25%, (food, clothing up to $175, prescriptions and periodicals are exempt)

Massachusetts state personal income tax
There are two tax rates, each for different incomes:

5.3% - wages, interest/dividends, long term capital gains
12% - short term capital gains (assets held for one year or less)

A tax return must be filed if Massachusetts gross income is above $8,000. There is a limited income credit that calculates taxes differently for those that are close to the taxable threshold.

Massachusetts state excise taxes

There are no taxes on alcohol in Massachusetts. Massachusetts voters repealed taxes on alcohol through Question 1, which removed the sales taxes as of Jan 1, 2011 and raised the sales tax to 6.25% on other products to compensate.

- $2.51 per package of 20 cigarettes,
- $3.31/31 gallons for malt beverages
- $.55/gallon for wine
- $.70 for champagne
- $1.10/gallon other alcohol
- $4.05/proof gallon for beverages more than 50% alcohol
- $.23 a gallon on gasoline and diesel

- Vehicle excise taxes are determined by list price and age of the vehicle. 10% of the manufacture’s list price. Tax bill is fixed after five years of ownership.

o In the year preceding the model year 50%
o In the model year 90%
o In the second year 60%
o In the third year 40%
o In the fourth year 25%
o In the fifth and succeeding years 10%

Massachusetts inheritance tax

There is no inheritance tax in Massachusetts. Massachusetts estate tax is independent of federal estate taxes and there is an exclusion of up to $1,000,000 on estates.

Massachusetts payroll taxes

State Disability Insurance – none
State Unemployment Insurance – 1.32% to 12.33%, wage base is $14,000. Employer contribution is 2.83%, construction employers contribute at 8.62%. There is a.06% contribution for work force training and .36% contribution for health insurance.
Minimum wage is $8 an hour

Massachusetts state property tax

There are no homestead exemptions in Massachusetts, but up to $500,000 in equity in a house can be protected from creditors. One person can normally claim this protection, unless one or both persons in the couple are disabled or elderly. There is also a “circuit breaker” program that prevents real estate taxes from getting too high and refunds a portion of taxes to individuals over 65 that meet certain thresholds for personal and combined income as well as the assessed value of the property.

Exemptions

The personal exemption for a single person is $4,400 annually, married at $8,800 and $1,000 per dependent. Veteran’s benefits and most pensions are not taxed under Massachusetts law. Government pensions and social security benefits are exempt from taxation.

Corporate income tax

Massachusetts corporate tax is calculated at 9.5% of the corporation’s taxable income as well as $2.60 per $1,000 of the corporation’s taxable net worth/tangible property. The minimum corporate tac amount is $456.