State-by-State Guide to Taxes on Retirees
Tool | December 2020

Massachusetts State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

Massachusetts

Add to State Compare List | View List
(0) selected | Compare up to 5

The Bottom Line
Flag of Massachusetts

Not Tax-Friendly

The Bay State offers a couple of breaks for retirees, but it's not a very tax-friendly place for seniors overall. When it comes to income taxes, Massachusetts doesn't tax Social Security and most government employee pension income. But all other retirement income is taxed at a flat rate of 5%.

Property taxes run high with an above-average statewide median tax rate, although there is a refundable tax credit available to eligible homeowners 65 or older. Massachusetts also has its own estate tax.

On the plus side, sales taxes in Massachusetts are on the low end. The state rate is 6.25%, but there are no local taxes to tack on.

Income Tax Range

Massachusetts has a flat rate of 5% of federal adjusted gross income.

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Income from contributory federal government, Massachusetts state, and Massachusetts local government retirement plans is exempt. Income from noncontributory military retirement plans is also exempt. In addition, a deduction is available for contributory pension income from other state or local governments that do not tax Massachusetts public pensions.

Railroad Retirement benefits are also exempt.

Sales Tax

6.25% state levy. No local taxes.

Groceries: Exempt
Clothing: Exempt if under $175
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

Massachusetts homeowners and renters who are 65 or older may qualify to claim a refundable "circuit breaker" tax credit on their state income taxes to offset real estate taxes or rent paid during the year on their principal home. For 2020, the senior's total income cannot exceed $61,000 for a single filer, $76,000 for a head-of-household filer, or $92,000 for married couples filing jointly. For homeowners, the value of the residence for 2020 cannot exceed $848,000. For 2020, the maximum credit is $1,150.

Some Massachusetts cities and towns also offer property tax "work-off" abatement programs, which allow seniors to do volunteer work for their local governments in exchange for a reduction of up to $1,500 on their property taxes. Senior homeowners age 60 or older must meet local program requirements to participate.

Annual Car Taxes and Fees

An annual vehicle excise tax based on the car's sticker price (MSRP) and age is imposed.

Estate and Inheritance Taxes

Estates valued at more than $1 million may be subject to a Massachusetts estate tax. Tax rates range from 0.8% to 16%. There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity.

Advertisement