You don’t necessarily have to live in Massachusetts to pay Massachusetts state income tax. The state of Massachusetts does have an estate tax that ranges from 0.8% to 16% depending on the size of the estate. Out-of-state vendors who sell meals in Massachusetts generally have the same responsibilities as Massachusetts vendors. Please note, you can only use one bank Catch Up Bookkeeping account/payment method per payment. You will need to make a separate payment if you use multiple bank accounts/payment methods. We are mailing all taxpayers currently registered for Meals Tax new MFB certificates at the end of June.

Tax Year 2024 Personal Income (Chapter Changes

The filing due date for S corporation tax returns is the 15th day of the third month following the close of each taxable year. Long-term capital gains from investments are taxed at 5 massachusetts tax rate percent in Massachusetts, and short-term capital gains are taxed at 8.5 percent. Long term gains from the sale or exchange of collectibles is taxed at 12 percent. A long-term capital gain is a profit from selling an asset you’ve owned for more than one year.

Withholding Taxes on Wages

For example, a vendor that only sells meals should generally be able to report the actual amount of cash and credit used because all sales are subject to the sales tax on meals. Taxpayers will need to provide DOR with records showing how the taxpayer arrived at the method used to report the cash sales versus credit sales in such cases. Massachusetts updated its withholding guidance in response to recent tax law changes, including the reduction of the standard income tax rate and the implementation of the surtax on high earners. If your employer did not adjust withholdings accordingly, you may have underpaid throughout the year. Additionally, if you claimed too many exemptions or allowances on your M-4, less tax would have been withheld, resulting in a larger balance due at tax time.

• Whether the employee works on the road, at home or in an office maintained by you, does not affect your withholding obligation as the employer.
• Machine-readable form includes file uploads through MassTaxConnect and electronic data transfer.
• As a result of this update, the Massachusetts personal income tax will now conform to federal tax law changes affecting the determination of Massachusetts gross income and deductions that have been enacted since 2022.
• Such contractors bear the burden of proof of showing on an audit that the items purchased are or will be used in an exempt way.

Federal Single Filer Tax Tables

Once the form is accepted, the restaurant doesn’t have to collect and send the sales tax on meals to the Commonwealth. See Sales Tax Treatment of Restaurant Meals that are Resold by Restaurant Meal Delivery Companies for more information. Vendors collecting and sending sales tax on meals must file monthly returns. Returns are due on or before the 30th day following the month represented by the return. Avalara can automate your multi-state sales tax returns, let you know when you’ve triggered nexus, and more.

• While Massachusetts has a flat tax structure, states like California and New York impose higher top marginal rates.
• While the state levies a 5% tax on income up to $1 million, income over $1 million is taxed at 9%.
• Employers are responsible for collecting and sending employee withholding taxes to us.
• Effective for returns for tax periods beginning on or after January 1, 2022, and any late-filed returns for earlier periods, you must file sales tax on meals returns and make payments electronically.
• The certificate must be displayed on the business premises where customers can easily see it.
• The gross sales will have to be reported either as cash sales on line 1a or credit sales on line 1b.

Any later change that would apply the marketplace rules to these businesses will be applied by DOR on a prospective basis. Taxpayers who do not comply with the requirements to file returns, make payments or electronically submit data Online Accounting to DOR will be penalized up to $100 for each return, payment or data transfer they submitted incorrectly. See Penalty for Failure to File, Report or Pay in the Prescribed Format, and DOR e-filing and payment requirements for more information.

• The state now limits the student loan interest deduction to $2,500 in 2024, aligning with federal tax rules.
• Massachusetts provides a wide array of credits (dollar for dollar offsets of tax liability) including an earned income tax credit, a circuit breaker credit and a solar, wind and energy tax credit.
• Unlike a Value Added Tax (VAT), the Massachusetts sales tax only applies to end consumers of the product.
• Circular M provides detailed rules for withholding, including an example of the required computation for bonuses on page 13.
• Companies or individuals who wish to make a qualifying purchase tax-free must have a Massachusetts state sales tax exemption certificate, which can be obtained from the Massachusetts Department of Revenue .
• In Massachusetts, your employer will withhold money from your paychecks to put toward your state income taxes.

Because income, particularly from capital gains, is closely tied to economic performance, it can be a volatile source of revenue. Payments of pension, annuity and/or other similar payments made to Massachusetts residents who haven’t elected to be exempt from U.S. income tax withholding are subject to Massachusetts income tax withholding requirements. Generally, lump sum payments and eligible rollovers from qualified pension and annuity plans are also subject to Massachusetts withholding, unless they’re of a type that would never be subject to Massachusetts personal income tax. See Tax Changes Contained in “An Act Enhancing State Revenues” and Related Acts, or Massachusetts Income Tax Withholding on Eligible Rollover Distributions. As an employer, you must withhold state income taxes from salaries or payments made to employees who live in or are employed in Massachusetts and you must send them in, along with the appropriate form or electronic return, on time.