Personal income tax
Massachusetts imposes two tax rates:
- A 5.2 percent rate that applies for the 2014 tax year to wages, interest and dividends and long-term capital gains. Beginning with the 2015 tax year, the rate drops to 5.15 percent.
- A 12 percent rate applies to short-term capital gains, long- and short-term capital gains on collectibles and installment sales before 1996 that are classified as capital gain income.
A Massachusetts full-year and/or part-year resident is required to file a state tax return if his or her Massachusetts gross income is in excess of $8,000.
Form 1, Resident Income Tax Return, is due by April 15, or the next business day if that date falls on a weekend or holiday.
The state's Limited Income Credit is available for taxpayers whose income falls below the specified filing threshold for their status. This credit is an alternative tax calculation that can result in a tax reduction for people whose income is close to the no-tax status threshold. The credit is not available to married taxpayers who file separate returns. See the Form 1 instructions for details.
Massachusetts imposes a 6.25 percent sales tax on retail sales of tangible personal property in Massachusetts by any vendor.
Personal and real property taxes
All real and tangible personal property located within the Commonwealth of Massachusetts is taxable unless specifically exempted by statute.
The administration of the assessment and collection of all real and tangible personal property taxes in the Commonwealth of Massachusetts is handled by the city and town assessor and collected in the jurisdiction where the property is located.
Lower rates among jurisdictions, however, don't necessarily mean lower tax bills; that is determined by the assessed value of property (based on 100 percent of the fair market value) within a municipality.
Property is taxed according to its class: residential, open space, commercial, industrial and personal property.
All real and tangible personal property taxes are due in two installments. The first half of the tax is due by Nov. 1 in the year of assessment or within 30 days from the mailing date of the tax bill, whichever is later. The second half of the tax is due by May 1 of the year following the assessment year.
There are several property tax exemptions and deferrals available for certain taxpayers and/or types of property.
Inheritance and estate taxes
Massachusetts does not have an inheritance tax, but does collect an estate tax. Previously, the state's estate tax system was tied to federal estate tax collection, but Massachusetts decoupled its estate tax from the current federal levy.
Other Massachusetts tax facts
Since May 16, 2004, Massachusetts law has permitted same-sex couples to be married. For Massachusetts personal income tax purposes, same-sex spouses file as married persons, jointly or separately.
Taxpayers can deduct some commuting costs, including payments of more than $150 for tolls paid through the Massachusetts FastLane account and the cost of weekly or monthly passes for MBTA transit, bus, commuter rail or commuter boat. The total deduction amount cannot exceed $750 per individual. More information is available on Form TIR 06-14 and the work sheet for Schedule Y.