Massachusetts Tax 2025: Guide to Income, Sales, Property, and Retirement Taxes

In November 2022, Bay State voters approved an additional 4 percent tax on annual income above $1 million, beginning in tax year 2023. Annual income above $1 million (adjusted annually for inflation) is taxed at 9 percent.A personal income tax exemption allows for a subtraction from gross income. Anyone who files a Massachusetts state tax return is given a personal exemption amount based on their tax filing status. Taxpayers may also be eligible for additional exemptions, such as those for having qualifying dependents or for having paid certain types of medical or dental costs throughout the tax year. Anyone earning over $8,000 in Massachusetts annual gross income is required to file a state tax return. Those earning less than this massachusetts tax brackets amount do not need to file a return, but they can still file a return to claim refundable tax credits.

Massachusetts State Income Tax: Rates and Who Pays in 2025

• Other exempt items include periodicals, admissions tickets (i.e. to movies or sporting events), professional or personal services and most health care products.
• Estates seeking an extension of time to file and pay the estate tax must still request approval from DOR by filing Form M-4768.
• The commonwealth also has a limited income credit, which can result in a tax reduction for a taxpayer whose income is close to the no-tax threshold.
• As a taxpayer, you must make estimated payments if the expected tax due on your taxable income not subject to withholding is more than a certain amount.
• An overpayment may also be generated if you are entitled to a refundable credit that exceeds the amount of tax due.

Thus, the individual would pay a total of $17,280 in Massachusetts state income taxes for 2025. In this guide, we’ll explore key components of The Bay State’s tax system, from income and sales taxes to property taxes and retirement benefits. Also, taxpayers with taxable income of more than $1,053,750 in 2024 also must pay a 4 percent surtax. However, short-term capital gains from the sale of capital assets are taxed at an 8.5 percent rate, and long-term capital gains from the sale or exchange of collectibles are taxed at a 12 percent rate.

Federal Income Tax Tables in 2021

Massachusetts taxpayers must stay informed about the 2025 tax brackets, income Medical Billing Process tax rates, and filing thresholds. High-income individuals should proactively explore legal tax-saving strategies to minimize their liabilities, especially under the millionaire tax. Consulting with a tax professional can help ensure compliance while optimizing tax savings. As tax policies evolve, staying updated on potential legislative changes is crucial for effective financial planning. Most long-term capital gains, as well as interest and dividend income, are taxed at the standard income tax rate of 5.00%. Capital gains in those categories are included as taxable income on the Massachusetts income tax return.

• Your employer will subtract that amount from the amount due in Massachusetts state taxes and withhold the difference to cover your Massachusetts liability, too.
• The two most popular tax software packages are H&R Block At Home, sold by the H&R Block tax preparation company, and TurboTax Federal & State, sold by the Intuit software company.
• The Tax tables below include the tax rates, thresholds and allowances included in the Massachusetts Tax Calculator 2020.
• According to the latest economic data from the US Census Bureau, the average per capita state and local tax burden is $7,109.
• Massachusetts has a flat personal income tax rate of 5% on your federal adjusted gross income.

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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. This page contains important information on the time limitations for claiming a refund and on the calculation of interest. Estates seeking an extension of time to file and pay the estate tax must still request approval from DOR by filing Form M-4768. Once you’ve filed your tax return, all you have to do is wait for your refund to arrive.

As mentioned above, incomes that exceed this threshold are subject to a 4% surtax that was first instituted in 2023. State residents who would like to contribute more to the state’s coffers also have the option to pay a higher income tax rate. Income taxes are taxes imposed on individuals or entities that earn income. For purposes of this article, we’ll be focusing on “ordinary income,” which is the income that you earn from work or from your small business, as well as rental income, interest, royalties, and retirement income. Understanding the 2025 tax brackets in Massachusetts is essential for effective financial planning. With changes in tax laws and the impact of the MA millionaire tax, taxpayers need to prepare for potential adjustments in their liabilities.

That might involve making investments that offer tax benefits, choosing the right type of retirement account, taking advantage of deductions and credits, or investing in a tax-advantaged account. Massachusetts has its own estate tax, which applies to any estate above ledger account the exclusion amount of $2 million. If the estate has a gross value (before any deductions) over that level, a Massachusetts estate tax return must be filed.