Massachusetts State Tax Guide

Check the Massachusetts Form 1-NR/PY to learn more.AARP’s Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want. Property taxes in Massachusetts are one of the most significant sources of revenue for local governments. In some counties, median property taxes paid exceed $5,300 per year.

Any earnings you make above $200,000 are subject to a 0.9% Medicare surtax, which is not matched by your employer. That goes for both earned income (wages, salary, commissions) and unearned income (interest and dividends). Today’s map shows state and local tax collections per capita in each https://www.bookstime.com/ state as of fiscal year (FY) 2021, the most recent year for which full state-by-state data are available. But because the events of recent years are so significant, we will also discuss the trajectory of state and local tax collections through FY 2023, which ended in June of this year.

Overview of Massachusetts Taxes

The fastest way to find more personalized information about those, Ariniello said, is to reach out to the Taxpayer Referral and Assistance Center. Notably, Massachusetts has the highest maximum marginal tax bracket in the United States. You can learn more about how the Massachusetts income tax compares to other states’ income taxes by visiting our map of income taxes by state. The state of Massachusetts requires you to pay taxes if youâre a resident or nonresident that receives income from a Massachusetts source. The state income tax is charged at a flat rate of 5%, and the sales tax is charged at a rate of 6.25%. The Massachusetts marginal tax rate used in our example calculation above on this page is 5.05%.

This system, also enacted last year, creates “substantial protection and savings for homeowners,” the order states. Last year, the commercial rate was $24.68 per $1,000 of real estate value, and the residential rate was $10.74, Ariniello said. To calculate the right sales tax in Massachusetts you’ll need to add up the state, county and city rates for your location. The easiest way to do this is by downloading our lookup tool to get the detail you need in seconds. If the credit you’re owed exceeds the amount of the total tax payable for the year, you’ll be refunded the additional amount of the credit without interest. For FY 2021, the District of Columbia surpassed all states with $13,278 in per capita tax collections.

Justices wary of tax law challenge

The Personal Exemption, which is supported by the Massachusetts income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses. Likewise, you can take an additional dependent exemption for each qualifying dependent (like a child or family member), who you financially support. Most refunds are claimed on an original massachusetts income tax return and will be issued automatically by the Department. For e-filed returns the turnaround time is about 6 weeks; but for paper returns it could take up to 10 weeks. You must claim your refund or credit within a certain time period, as further detailed below. Also, the Department of Revenue must issue refunds within a certain time period or pay interest on the amount of the refund.

• On the other hand, Massachusetts’ taxes on alcohol are some of the lightest in the U.S.
• An extension to file a return doesn’t extend the due date for paying any tax due.
• However, any taxable item brought into the state within 6 months of purchase for use, storage or consumption in Massachusetts is generally subject to the use tax.
• 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.
• At the other end of the spectrum, Alaska was lowest at $4,192, followed by Alabama ($4,245), Tennessee ($4,272), Florida ($4,405), and Mississippi ($4,435).

However, any taxable item brought into the state within 6 months of purchase for use, storage or consumption in Massachusetts is generally subject to the use tax. Out-of-state retailers that aren’t required by law to register as Massachusetts vendors may register voluntarily to collect use tax. A Massachusetts man was sentenced today to 18 months in prison for evading taxes on income he earned as a commercial fisherman.

Getting Your Massachusetts Tax Refund

This page contains important information on the time limitations for claiming a refund and on the calculation of interest. Unlike motor vehicles and trailers, the sales or use tax on boats, recreational off-highway vehicles, and snowmobiles must be paid by completing a Form ST-6 electronically or by paper. However, any individual clothing item that costs more than $175 is taxable on the amount it goes over $175. Thus, the tax on a $200 suit would be $1.56 (which is 6.25% of the taxable $25 difference).

Comparatively, federal corporate tax is applied marginally rather than at a flat rate, and the corporate tax rate of 15 other states surpasses that of Massachusetts. If you’re already living well within your budget, consider increasing your contributions to tax-advantaged accounts like a 401(k), HSA or FSA. Your contributions will come out of your earnings before payroll taxes are applied. If your company has an HR department, you can schedule a meeting to discuss your options. You may also be able to shelter money from taxes by enrolling in a commuter benefits program or by authorizing payroll deductions for contributions to a 529 college savings plan.

Income tax returns must be filed every spring, but income taxes are also paid all year round. This is done by authorizing employers to withhold money from employees’ paychecks to put toward income taxes. When you fill out a W-4 form, you indicate your marital status, state whether you’re exempt from income tax withholding and more.

• Estates seeking an extension of time to file and pay the estate tax must still request approval from DOR by filing Form M-4768.
• Sales of standardized software are taxed, regardless of whether the software is delivered electronically or in a physical format.
• Legislative leaders said the total impact of the measure for fiscal year 2024 will be $561.3 million.
• City councilors once again brought up the Boston’s annual property tax decisions Tuesday morning, weighing out how much residential and commercial property owners will pay.
• Massachusetts’s tax system ranks 34th overall on our 2023 State Business Tax Climate Index.
• Tax-Rates.org provides easy access to five of the most commonly used Massachusetts income tax forms, in downloadable PDF format.