2022 Massachusetts State Taxes – Forbes Advisor
Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
The State of Massachusetts requires you to pay taxes whether you are a resident or a nonresident who receives income from a Massachusetts source. State income tax is charged at a flat rate of 5% and sales tax is charged at a rate of 6.25%.
Massachusetts offers tax deductions and credits to reduce your tax liability, including a deduction for rent and commuters, as well as tax credits for income tax paid to another jurisdiction.
Massachusetts income tax brackets and rates
The state of Massachusetts has a flat personal income tax rate of 5% for anyone who earned more than $8,000 in 2021, regardless of filing or residency status.
If you earned less than $8,000 in the 2021 tax year, you don’t have to file a Massachusetts tax return. However, you can choose to do so if you wish to benefit from certain tax credits, such as the earned income tax credit.
Income Tax Deductions for Massachusetts
Massachusetts does not offer a standard deduction.
Deduction for rent paid
If your principal residence is in Massachusetts and you paid rent to a landlord in the past year, you can deduct 50% of the rent paid, up to $3,000 (up to $1,500 for married persons declaring separately).
If you share the rent with someone else, each taxpayer is entitled to the deduction for the part of the rent they pay. Likewise, if your rent is paid by a third party, such as a relative, you are not eligible for this deduction.
If you, your spouse, or a dependent are attending a qualifying two- or four-year college for a degree, diploma, or certificate, you can deduct tuition that exceeds 25 percent of your Massachusetts AGI. However, the amount of scholarships, grants or financial aid that the student receives must be subtracted from the total tuition fees.
In particular, only school attendance fees can be deducted from your taxable income. Deductions for associated costs, such as room and board, books, or personal expenses are not allowed.
If you commute to work, you can deduct certain transportation expenses such as tolls paid through an EZ Pass MA account and weekly or monthly pass fees for the Massachusetts public transit system.
You can deduct any expenses that exceed $150 (married taxpayers filing jointly can deduct expenses over $150 per person). The total amount cannot exceed $750 per person.
If part of your expenses were reimbursed by your employer, the total amount paid must be reduced by the amount of the reimbursement.
Massachusetts allows other miscellaneous deductions, such as jury fees remitted to your employer, certain attorneys’ fees, and court costs for unlawful discrimination and other expenses.
Massachusetts State Income Tax Credits
Income tax paid to another jurisdiction Tax credit
If you are a resident or part-year resident of Massachusetts and you report income in another state, U.S. territory, or Canadian province, you may be entitled to a credit for the amount of tax on income paid to the other jurisdiction.
Year-round residents can receive a credit for all of their adjusted tax paid. Part-year residents will receive a credit equal to the lesser of the amount of taxes owed to the other jurisdiction or the amount of your Massachusetts taxes owed on the gross income taxed in that jurisdiction.
This credit is non-refundable and non-transferable.
Solar, wind and energy tax credit
Year-round and part-year Massachusetts residents who have a primary residence in the state may qualify for the solar, wind, and energy tax credit. The credit only applies to solar and wind energy sources. You can claim the lesser of 15% of net expenses for ownership of the renewable energy source or up to $1,000.
This credit is non-refundable, but if the credit is more than you owe, you can carry forward the excess for up to three years.
Lead paint removal tax credit
If you own a residential property in Massachusetts and you paid to remove or fix a lead paint problem, you may be eligible for a tax credit, provided you comply with state laws.
Credit is worth the cost of removal or repair, up to $1,500. In the meantime, if you were unable to put your residence under provisional control, defined by the State as temporarily dealing with risks related to lead, you are entitled to a credit worth half the cost of the repair, up to to a maximum of $500. The co-owners are also entitled to a credit for repairs carried out in the common areas in addition to the work carried out in their individual units.
This credit is non-refundable, but if the credit is more than you owe, you can carry the excess forward for up to seven years.
Do I have to pay income taxes in Massachusetts?
Full-year and part-year residents who earned at least $8,000 in annual gross income in Massachusetts must file a tax return, regardless of their filing status.
If you are a nonresident with an annual gross income of more than $8,000 or the prorated personal exemption (whichever is less), you must file your taxes in Massachusetts. Your prorated tax exemption is your personal exemption adjusted by your percentage of your Massachusetts income to your total gross income from all sources.
Sales tax and sales tax rate
Massachusetts charges a 6.25% sales tax.
Property taxes and property tax rates
Property tax rates are determined locally. That said, Massachusetts offers a few exemptions for the following groups:
- Up to $500 for legally blind taxpayers
- Eligible seniors: up to $1,000 or 20% of the average residential property assessment in your city or town
- $175 for eligible seniors, surviving spouses and minor children of a deceased parent
- Up to full exemption for qualifying veterans
- Full exemption for qualifying religious and charitable organizations
Capital gains tax
Generally, Massachusetts taxes capital gains as ordinary income. However, some capital gains are taxed at the rate of 12%.
Inheritance and inheritance tax and exemption from inheritance and inheritance tax
Massachusetts collects property tax on estates worth more than $1,000,000. However, Massachusetts does not charge estate tax after December 31, 1975.
Meanwhile, the state estate tax only applies to the estates of those who died on or before December 31, 1975.
Compare the best tax software of 2022