Governor Signs Tax Cuts| 11:38AM / Monday, October 09, 2023 | |
BOSTON — Governor Maura T. Healey signed into law Massachusetts' first tax cuts in more than 20 years.
The $1 billion package includes proposals introduced in her tax cuts proposal in March, including an expanded Child and Family Tax Credit that is now the most generous in the country, increases to the Rental Deduction, Senior Circuit Breaker Tax Credit, and Housing Development Incentive Program (HDIP), and changes to the Estate Tax and Short Term Capital Gains to address areas of the tax code where Massachusetts is an outlier.
Governor Healey also announced that she is launching a Cutting Taxes, Saving You Money tour in communities across the state to raise awareness about the relief coming for families, renters, seniors and businesses. The tour kicks off on Thursday with visits to Gardner and Haverhill to celebrate the savings coming for families and children.
"We are thrilled to deliver on our promise to pass tax cuts that will result in real savings for the people of Massachusetts, including the country's largest child and family tax credit that will go back in the pockets of parents and caregivers. Everywhere we go, we hear about how people are struggling to keep up with the rising cost of living. This tax package delivers savings for those who need it most, while making long overdue changes that will better allow Massachusetts to compete with other states," said Governor Healey. "We're grateful for the partnership of Speaker Mariano, Senate President Spilka and the Legislature for seeing this through and securing the state's first tax cuts in more than 20 years."
Provisions of the tax cuts package include:
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Child and Family Tax Credit – Eliminates two-dependent cap and increases credit from $180 per dependent child, disabled adult, or senior to $310 for 2023 and to $440 on a permanent basis, starting in 2024. An estimated 565,000 families will benefit, and this will be the most generous universal child and dependent tax credit in the county.
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Earned Income Tax Credit (EITC) – increases credit from 30 percent to 40 percent of the federal credit
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Estate Tax – increases threshold from $1 million to $2 million with a credit that mitigates cliff effect
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Short-Term Capital Gains – reduces rate from 12 percent to 8.5 percent
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Rental Deduction – increases cap from $3,000 to $4,000
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Senior Circuit Breaker Tax Credit – doubles credit, indexed to inflation, which equates to an increase from $1,200 to $2,400
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Single Sales Factor – shifts from three-factor apportionment system based on business's share of sales, payroll, and property to apportionment based solely on sales
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Low-Income Housing Tax Credit (LIHTC) – increases annual program cap from $40 million to $60 million
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Housing Development Incentive Program (HDIP) – increases annual program cap from $10 million to $57 million in 2023, and thereafter to $30 million annually
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Student Loan Repayment Assistance – exempts employer assistance for student loan repayment from taxable income
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Dairy Tax Credit – increases annual program cap from $6 million to $8 million
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Cider Tax Rate – applies lower tax rates to a broadened class of beverages
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Lead Paint Abatement Credit – doubles credit to $3,000 for full abatement and $1,000 for partial abatement Title V (Septic) Tax Credit – triples maximum credit to $18,000, increases percentage of eligible expenses from 40 percent to 60 percent; and allows taxpayers to claim up to $4,000 in any year, versus $1,500 in current law
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Deductible Commuter Transit Benefits – adds public transit fares, RTA fares and bicycle expenses to deductible commuter expenses
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Apprenticeship Tax Credit – expands eligible occupations
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Municipal Affordable Housing Property Tax Exemption – permits municipalities to adopt local property tax exemption for affordable real estate
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Property Tax Liability Reduction for Senior Volunteer Services – permits municipalities to increase the maximum property tax abatement available to seniors who perform volunteer services from $1,500 to $2,000
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Stabilization Fund Cap – increases the cap on Stabilization Fund deposit from 15 percent to 25.5 percent of budgeted revenues
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