This week, Massachusetts Governor Maura Healey unveiled a $742 million tax relief package designed to provide relief to the Commonwealth’s most vulnerable populations and make the state's tax structure more competitive.

The proposal provides significant savings for families, renters, seniors, commuters, and other Massachusetts taxpayers. Governor Healy stated that the proposal centers around “affordability, competitiveness and equity, delivering relief to those who need it most and making reforms that will attract and retain more business and residents to our great state”.

Key proposed changes include:

Child and Family Tax Credit

The update: This expanded and simplified benefit will provide families with a $600 refundable credit for each qualifying dependent, including children under 13, people with disabilities, and seniors aged 65 and older. It also removes the cap on dependents. This credit would replace the Household Dependent Tax Credit and the Dependent Care Tax Credit, which provided a smaller benefit and were capped at 2 dependents.

The impact: This credit would help 700,000 Massachusetts taxpayers keep up with the rising costs of child and senior care. It will also help attract working professionals and aid businesses in recruiting a skilled workforce.

Estate Tax

The update: The proposal would eliminate the estate tax for all estates valued at up to $3 million and reduce taxes for larger estates. The proposal would also establish a non-refundable $182,000 credit for each estate, without a tax increase on estates of any size.

The impact: Currently, 70% of estates in Massachusetts are under the $3 million threshold, so this change would eliminate taxes for most estates, reducing the tax burden on taxpayers. Massachusetts is one of only 12 states that impose an estate tax at all—and nearby states who do have an estate tax currently have a higher threshold—so this change would help make the state more competitive.

Renter Deduction

The update: Currently, the renter deduction is capped at 50% of rent up to $3,000. The proposed legislature would increase the $3,000 cap to $4,000.

The impact: This increase would help 880,000 Massachusetts renters offset the rising cost of living.

Senior Circuit Breaker Credit

The update: The proposal would double the maximum Senior Circuit Breaker Credit from $1,200 to $2,400. This credit provides relief for low income seniors (aged 65 or older) with high property tax brackets or rent payments.

The impact: This increase would help 100,000 Massachusetts seniors stay in their homes.

Short Term Capital Gains

The update: The proposed legislation would reduce the Short Term Capital Gains Tax from 12% to match the Long Term Capital Gains Tax rate of 5%.

The Impact: This would bring relief to 150,000 taxpayers, and increase the competitiveness of Massachusetts, placing it more in line with other states. Currently, only 2 other states—Wisconsin and South Carolina—have Short Term Capital Gains tax rates that are higher than their Long Term Capital Gains tax rates.

The proposal includes additional relief items, which include:

• Apprenticeship Tax Credit
• Student Loan Repayment Exemption
• Commuter Transit Benefit Expansion
• Lead Paint Abatement Credits
• Septic Tank Repair Credits
• Brownfields Program
• Live Theater Tax Credit
• Dairy Tax Credit
• Cider Tax Treatment

More details on the proposal can be found on www.mass.gov. If you have questions about the pending legislation and its impacts, leave a comment below, or feel free to contact me directly. I’m happy to help!