Massachusetts House Passes Tax Relief Package

Before addressing its FY24 budget proposal, the Massachusetts House of Representatives unveiled and passed legislation aimed at reforming certain provisions within the Massachusetts tax code. With a focus on broad tax reform, the Massachusetts House of Representatives passed legislation that is estimated to deliver a little less than $1 billion of tax relief to residents throughout the Commonwealth. It should be noted that most of the reform is geared towards residents with one major change to corporate taxation in the form of a single sales factor apportionment.

Specifically, the legislation includes the following tax changes, some with a phased-in implementation period:

Child and Dependent Tax Credit. The proposal would combine the Child Care Expenses Credit with the Dependent Member of Household Credit to create one refundable $600 credit per dependent, while eliminating the current cap. If ultimately passed, this proposal would be phased in over three years, and would be fully implemented in FY27: taxpayers could claim $310 per dependent in FY24, $455 per dependent in FY25, $600 per dependent in FY26, and $614 per dependent in FY27. The proposal would cost $165 million in the first year of implementation and would cost $487 million when fully implemented in year three. It is expected to impact over 700,000 Massachusetts families.

Estate Tax. The Commonwealth is one of only 12 states that impose this tax and has the lowest estate tax exemption threshold in the country. The bill proposes increasing the estate tax threshold from $1 million to $2 million, and eliminates the “cliff” effect, taxing the value of the estate that exceeds $2 million, and not the entire estate as the law currently requires. This is expected to cost $231 million per year.

Senior Circuit Breaker Tax Credit. The proposal would double the Senior Circuit Breaker Tax Credit from $1,200 to $2,400. This change is expected to continued on page 11

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