Navigating the complexities of state taxes can be daunting, but understanding Massachusetts' tax landscape is essential for residents and newcomers alike.
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.
Massachusetts tax: Overview
Massachusetts has a flat personal income tax rate of 5% on your federal adjusted gross income. However, if you're earning more than $1 million, there's an additional 4% tax—often called the "Millionaires Tax."
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When it comes to property taxes, the Bay State isn’t exactly the most affordable, and it also has an estate tax to think about. On the bright side, Massachusetts keeps its sales tax relatively low, which helps balance things out.
In the News: As Kiplinger reported, lawmakers compromised last year on a widespread Massachusetts tax relief package, which includes tax breaks for residents of all income levels. What some call the largest tax relief package in history would cost the Commonwealth $1 billion when the legislation is fully phased in.
Massachusetts Gov. Maura Healey says the tax relief would make Massachusetts “more affordable.”
For more information, see $1 Billion Massachusetts Tax Relief: What's Included?
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the Tax Foundation, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Massachusetts income tax rate
Massachusetts has a graduated state individual income rate ranging from 5% to 9% of federal adjusted gross income. (Note: Massachusetts voters approved a constitutional amendment to add a 4% tax on taxable income over $1 million. That started in 2023.)
Massachusetts retirement taxes
- Social Security: Not taxable
- Pensions: Taxable (Government and public pension plans may be tax-exempt.)
- 401(k) and IRA Distribution: Taxable
- Railroad Retirement benefits are also exempt.
Massachusetts sales tax
Massachusetts has a 6.25% state-level sales tax. There are no local sales taxes.
- Groceries: Exempt
- Clothing: Exempt if sold for $175 or less
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
How much are property taxes in Massachusetts?
In Massachusetts, average property taxes are paid about 1.04% of assessed home value, according to the Tax Foundation.
Massachusetts Property Tax Breaks for Retirees
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.
Massachusetts gas tax
- Gasoline: $0.24 per gallon
- Diesel: $0.24 per gallon
Massachusetts taxes on alcohol and tobacco
Massachusetts tobacco and marijuana taxes
Product | Tax Amount |
|---|---|
Cigarettes and cigars | $3.51 per pack of 20 |
Other tobacco products | 40% of the wholesale price |
Medical Marijuana | 0.00% |
Recreational Marijuana | 17% (cannabis sales tax of 6.25% and state excise tax of 10.75%) |
Source: The Sales Tax Handbook
Massachusetts alcohol taxes
Product | Tax Amount |
|---|---|
Beer | $0.11 per gallon |
Wine | $0.55 per gallon |
Liquor | $4.05 per gallon |
Alcohol sales are exempt from sales tax in Massachusetts.
Source: The Sales Tax Handbook
Massachusetts estate and inheritance taxes
- Estates valued at more than $2 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.
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