(BOSTON– 6/15/23) The Massachusetts Senate approved on Thursday a $590 million Tax Relief bill which delivers support to low- and middle-income earners and chips away at the headwinds that threaten Massachusetts’ competitiveness. Focusing on providing relief to residents across Massachusetts while upholding fiscal responsibility, the Senate’s tax relief package will provide relief to renters, seniors, and parents struggling with high early education costs while also increasing much-needed housing production. With the recent passage of the FY24 budget last month, the Commonwealth is now poised to secure and strengthen its economic foundation to weather future uncertainty.
“I am pleased to report that the Senate tax package features equitable and progressive tax relief for the Commonwealth, as well as the constituents of the Second Plymouth and Norfolk district,” said Senator Michael D. Brady (D-Brockton), Chair of the Joint Committee of Public Service. “Our proposal focuses on areas of concern to the working families and individuals within the City of Brockton, and the towns of Avon, East Bridgewater, Halifax, Hanson, Randolph, and Whitman. Most notably, there were several Amendments adopted in the Senate tax package that provide relief needed most by my constituents, including the RTA Commuter Tax Reduction, Commuter Transit Benefits, Savings for First-Time Homebuyers, and an increase in the Senior Circuit Breaker Tax Credit Cap (from $750.00 to $1,500.00).”
“The RTA Commuter Tax Reduction applies a commuter deduction to fares purchased for Regional Transit Authority transit, similar to what is already in place of tolls, fast lane accounts, and weekly or monthly MBTA passes. Subsequently, the Commuter Transit Benefits expands current public transportation deduction eligibility to include all trip fares for MBTA, RTA, and municipally owned, public or quasi-publicly owned commuter boat fares and bike memberships; a lower deduction threshold from $150.00 for $50.00 (expanding eligibility) and defines fare. In addition to transit benefits, the Savings for First-Time Homebuyers creates a closing cost assistance program for income-eligible first-time homebuyers, as well as the system and benefits of designated first-time homebuyer’s savings accounts. Thanks to Senate President Spilka and Senate Ways and Means Chair Rodrigues, the Senate tax package will help to rebuild our hard-working communities and economy of the Commonwealth.”
This package includes a variety of initiatives as tax relief for the residents of Massachusetts. The bill:
• increases the Earned Income Tax Credit (EITC), which provides critical support to working families, from 30% to 40% of the federal credit
• merges existing credits into a new and enhanced Child and Dependent Tax Credit (CDTC), increases the amount of the credit from $180 to $310 per child/dependent, and eliminates the current cap of two children/dependents
• increases statewide cap for the Housing Development Incentive Program (HDIP) from $10 million to $57 million on a one-time basis and then to $30 million annually
• increases the cap on the rental deduction from $3,000 to $4,000
• raises annual authorization of the Low Income Housing Tax Credit, which directly supports the production of affordable housing units across the Commonwealth, from $40 million to $60 million
• doubles the maximum senior circuit breaker credit, which supports elderly residents who struggle with high housing costs, from $1,200 to $2,400
• excludes homes valued at under $2 million from the Estate Tax and eliminates the “cliff effect” by allowing a uniform credit of $99,600 for all estates
• triples the maximum credit under the Title V Tax Credit, which supports families who must replace failed septic systems, from $6,000 to $18,000, and lifts the amount claimable to $4,000 per year
• increases the statewide cap for the Dairy Tax credit from $6 million to $8 million
• expands eligible occupations for the Apprenticeship Tax Credit
• doubles the credit for lead paint abatement to $3,000 for full abatement and $1,000 for partial abatement
• expands the types of alcoholic drinks which qualify for a lower tax rate as part of the cider tax
Notably, this legislation ensures that student loan payment assistance offered by employers will not be treated as taxable compensation. The bill also adds regional transit fares and bike commuter expenses to the allowable commuter expenses eligible for favorable tax status.
To encourage affordable housing, the bill gives municipalities the option of adopting a local property tax exemption for real estate that is rented to a person below a certain area-dependent income level.
Additionally, the bill also directs the following studies:
• A study by the Executive Office of Administration and Finance on the feasibility of making advance quarterly payments of the Child and Dependent Tax Credit
• A study by the Department of Revenue on the efficacy of an additional, elective entity-level tax of up to 4 percent on a portion of qualified taxable income in the Commonwealth, coupled with a refundable credit, for eligible pass-through entities
As different versions of this legislation have passed the Senate and the House of Representatives, a conference committee will now be appointed to resolve differences between the two bills.