Part-year residents refer to individuals who either moved to the Catch Up Bookkeeping state and became residents or moved out of the state and ended their residencies within the tax year. June Sham is a lead writer on NerdWallet’s investing and taxes team covering retirement and personal finance. She is a licensed insurance producer, and previously was an insurance writer for Bankrate specializing in home, auto and life insurance. She earned her Bachelor of Arts in creative writing at the University of California, Riverside.

• A product that costs more than $175 is taxable above that amount, so a $200 pair of shoes would be taxed at 6.25% on the $25 above the exemption limit.
• If you’re a full-year resident with an annual Massachusetts gross income of more than $8,000, you must file a Massachusetts tax return.
• That goes for both earned income (wages, salary, commissions) and unearned income (interest and dividends).
• Your MLS account will still be available to file or amend returns or make payments for periods ending before July 1, 2024.
• Unlike the Federal Income Tax, Massachusetts’ state income tax does not provide couples filing jointly with expanded income tax brackets.

I did not receive my certificate in the mail. Where can I get a copy of my certificate?

• Once you’ve filed your tax return, all you have to do is wait for your refund to arrive.
• The 4% surtax applies to all chapter 62 taxpayers, including individuals, trusts, estates, and unincorporated associations, that have taxable income exceeding the surtax threshold in a taxable.
• The TCJA made significant changes to tax rates, deductions, tax credits and withholding calculations, and changed the value of personal exemptions to zero.
• Capital gains in those categories are included as taxable income on the Massachusetts income tax return.
• At the start of your new job, your employer will request that you complete a W-4 form.
• Also, taxpayers with taxable income of more than $1,053,750 in 2024 also must pay a 4 percent surtax.

An overpayment may also be generated if you are entitled to a refundable credit that exceeds the amount of tax due. Additionally, when you file an amended return or an abatement application to reduce the amount of tax due, and you previously paid more than what is now shown as due, an overpayment may be generated. The standard 5% tax rate remains unchanged, but the MA millionaire tax, introduced in 2023, continues to impact high earners.

Deductions

Employees who received bonuses, commissions, or other supplemental income may also have been affected, as these payments are often subject to a flat withholding rate that may not align with actual tax liability. Massachusetts relies heavily on the taxation of personal income to fund annual operating expenses, collecting approximately 55% of all tax revenues from this source. The Commonwealth taxes both earned (salaries, wages, tips, commissions) through the withholding tax and investment (interest, dividends, and capital gains) income.

July 2024 – Meals, Food & Beverage Tax (MFB) Replaces Meals Tax (MLS)

• Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978.
• If a sales or use tax is paid to a state that doesn’t have a reciprocal agreement with Massachusetts, then the sales/use tax credit does not apply.
• The deadline to file a Massachusetts state income tax return was April 15, 2025.
• Navigating the complexities of state taxes can be daunting, but understanding Massachusetts’ tax landscape is essential for residents and newcomers alike.
• As of January 1, 2020, IRS Form W-4 has been revised to reflect changes resulting from the TCJA where the withholding calculation is no longer tied to the number of personal exemptions claimed.

In this guide, we’ll explore key components of The Bay State’s tax system, from income and sales taxes to property taxes and retirement benefits. Starting in 2023, anyone making over $1,000,000 will pay an additional 4.00% of state tax, bringing the total income tax rate up to 9.00%. The 2021 tax rates and thresholds for both the Massachusetts State Tax Tables and Federal Tax Tables are comprehensively integrated into the Massachusetts Tax Calculator for 2021.

The tax rate was lowered to 5% for tax years beginning January 1, 2020, and after. Massachusetts has a flat rate, meaning that all income of the same types must be taxed at the same rate, but different income types can be taxed differently. MassTaxConnect users can use the “Amend” feature to change previously filed withholding, sales and use tax (including sales tax on meals) and room occupancy tax returns. Business taxpayers can also use MassTaxConnect to dispute an audit finding or a penalty by choosing “File an Appeal” under “Other Actions” in their account for each tax type. Massachusetts imposes additional taxes on specific types of income, which may have contributed to an unexpected increase in your tax bill. Short-term capital gains—profits from selling assets held for one year or less—are taxed at 12%, significantly higher than the standard income tax rate.

While the tax rate is set explicitly by the Massachusetts legislature, the Massachusetts personal exemption is indexed to inflation and changes every year. Exemptions are generally related to your filing status and number of dependents you report on your tax return, but not always. Your filing status on your Massachusetts personal income tax can affect your exemptions and how much you’re taxed. Massachusetts does not have a standard deduction, but it allows many of the same itemized deductions as the federal government, as well as some additional ones.

Vaping Taxes by State, 2025

A vendor of meals should include the amount of all gross sales of meals paid for with a debit or credit card during the period. Anyone who sells meals that are subject to sales tax in Massachusetts is a meals tax vendor. If a liquor license holder operates a restaurant where meals are served, the license holder is presumed to be the meals tax vendor, whether the meals are served by the license holder or a concessionaire. You can use our Massachusetts Sales Tax Calculator to look up sales tax rates in Massachusetts by address / zip code.

Massachusetts State Taxes: What You’ll Pay in 2025

If there’s no state withholding in your business’s home massachusetts tax rate state, you must withhold and send to us the full amount determined for Massachusetts purposes. 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. The returns listed below allow taxpayers to include the 4% surtax in the calculation of total tax. Once you determine your taxable income for a tax year, you subtract the amount of the surtax threshold for that year. The difference between taxable income and the surtax threshold is the amount subject to the 4% surtax.

Massachusetts: Federal EITC(Earned Income Tax Credits) Rates and Thresholds in 2021

Massachusetts doesn’t collect sales tax on purchases of most prescription drugs and groceries. Prepared Food is subject to special sales tax rates under Massachusetts law. In most states, necessities such cash flow as groceries, clothes, and drugs are exempted from the sales tax or charged at a lower sales tax rate. All nonresident taxpayers with taxable income exceeding the surtax threshold must file a Form 1-NR/PY to report the 4% surtax, even if the nonresident otherwise participates in a composite return. A tax item from Part A, Part B, or Part C can reduce taxable income in another part only to the same extent it is otherwise permitted under the relevant statute. For example, under chapter 62 of the M.G.L., excess Part B losses may be deducted against capital gains attributable to a taxpayer’s trade or business when determining Part A or Part C taxable income.