9/27/23 by Peyton Benbow
Governor Maura Healey is encouraging the passage of an upcoming one billion dollar tax relief deal that Congress will vote on this week. The salient features of the package include removing the burdens of the cost of living and having dependents.
The legislation has undergone two years of debate and negotiations between the House and Senate.
Business owners who advocate for the passage of the package argued that the high cost of living in the Commonwealth requires tax relief to keep Massachusetts in line with other states. Massachusetts State representatives have discerned that extreme negotiation was necessary and they acted to ensure that both the House and Senate proposals were given consideration.
The bill would raise the tax credit allotted for children, disabled adults, and seniors from $180 to $310. The House proposed that it be raised to $600, but the Senate capped it at $310. This intends to lower the tax burden for those with children and dependents; it would benefit over 565,000 Massachusetts families who support over a billion dependents across the Commonwealth.
The tax credit is expected to cost roughly $165 million this fiscal year, growing to $458 million once in full effect.
The package includes a redefinition of the estate tax, raising the threshold from $1 million to $2 million to collect taxes on an estate after a person’s death.
It also features a tax credit for seniors who rent or own, from $1,200 to $2,400, as well as raising the renters’ tax deduction from $3,000 to $4,000. The package also includes a reevaluation of the Low Income Housing Tax Credit, raising the amount allotted from $40 million to $60 million once fully actualized.
These changes are intended to remove the burden of the high cost of living in the State. The summary for the tax relief deal states that “The housing crisis in Massachusetts demands a multifaceted approach” (Mass.gov). There are several redefining of tax rates and breaks included in this bill, with the estate and housing taxes making up most of the relief. This is expected to cost roughly $210 million a year to the State but would make the threshold more in line with other nearby states.
Governor Healey advocated for the inclusion of a short-term capital gains tax break. This would reduce the tax on short-term investments from 5% to 12%. This is expected to cost roughly $117 million and encourage residents to invest.
This deal is expected to give $561 million in tax reductions to Massachusetts residents, growing to $969.3 million once it reaches its full application. It would go into full effect on January 1, 2026, with initial implementation beginning this fiscal year, starting on July 1. The House will vote on Wednesday, September 27, the Senate will vote on Thursday, September 27, and it will move to Governor Healey’s signing.