Massachusetts State Income Tax: Rates and Who Pays in 2023-2024

The state income tax is charged at a flat rate of 5%, though certain capital gains income is taxed up to 8.5%. Arizona joined the growing list of states with a flat individual income tax structure, one year earlier than originally anticipated. 1828, tax triggers were established that set the state on a course to a 2.5 percent flat rate subject to reaching specified revenue targets. 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. For example, taxpayers can make deductions for child care expenses, college tuition (if it exceeds 25% of Massachusetts adjusted gross income), certain commuter costs, rental payments (50% of rent up to $4,000) and student loan interest payments. Massachusetts has a flat income tax rate of 5%, but charges a 4% surtax on income over $1 million.

Learn more about filing an extension, as well as penalties and interest.This guide was originally published on March 16, 2023 and has been updated to reflect new information. New York’s budget for fiscal year 2023, enacted in April 2022, accelerated income tax rate reductions originally passed in 2016 for middle-income earners. For tax year 2022, the tax rates on those levels of income were 5.85 and 6.25 percent, respectively. Iowa enacted comprehensive tax reforms in 2018, 2021, and 2022, and many of these reforms will continue phasing in over the coming years. Effective January 1, Iowa’s nine individual income tax rates were consolidated into four, and the top rate was decreased from 8.53 to 6 percent.

States with flat income tax rates

Generally, Massachusetts taxes capital gains as ordinary income. However, certain capital gains are taxed at a rate of 8.5%. Massachusetts offers tax deductions and credits to reduce your tax liability, including a rent and commuter deduction and a tax credit for taking care of a child or other dependent. Generally, to deduct these expenses, they must be unreimbursed, unless the employer included reimbursement in the employee’s taxable income. New Hampshire began phasing out its income tax on interest and dividend income in 2023, bringing the rate down from 5 to 4 percent.

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist. If you own a residential property in Massachusetts and paid to remove or fix a lead paint issue, you may be eligible for a tax credit, provided you complied with state laws. If you’re a Massachusetts resident or part-year resident and you report income to another state, a U.S. territory or a Canadian province, you may be entitled to a credit for the amount of income tax due to the other jurisdiction. 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 $4,000 (up to $2,000 for married people filing separately). Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

for Massachusetts Miscellaneous Income Tax Deductions

The federal Tax Cuts and Jobs Act of 2017 (TCJA) increased the standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. It was nearly doubled for all classes of filers by the 2017 Tax Cuts and Jobs mass state income tax Act (TCJA) as an incentive for taxpayers not to itemize deductions when filing their federal income taxes. (set at $13,850 for single filers and $27,700 for joint filers in 2023) while suspending the personal exemption by reducing it to $0 through 2025.