In full transparency, the following is a media release from Rep. Jack Patrick Lewis’ office submitted to SOURCE media for publication. (stock photo)
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FRAMINGHAM – On Thursday, April 13, in an effort to provide financial relief to families across the Commonwealth, and to make Massachusetts more competitive
with other states, Framingham’s representatives joined their colleagues in the Massachusetts House of Representatives to pass a tax relief proposal targeted at residents across all income levels.
“This tax relief package strikes the critically important balance of providing permanent financial relief to residents and businesses across Massachusetts, without compromising the long-term financial security of the Commonwealth,” Speaker of the House Ronald J. Mariano (Quincy). “I’m confident that this tax reform legislation will help to make Massachusetts more affordable for all residents, while also helping to make thenCommonwealth more competitive with other states. I want to thank Chairman Michlewitz and Chairman Cusack for their work crafting this package, as well as all the Members of the House for their input.”
The Massachusetts House of Representatives approved the bill 150-3 and now goes to the Senate.
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“The tax package the House passed this week is fair and equitable, providing financial relief for Massachusetts residents and ensuring our state remains competitive for businesses. Pragmatic policies like this bill are what continue to make Massachusetts one of the best states in the country to live, work and raise a family,” said Representative Danielle Gregoire, a Democrat from Marlborough, who represents part of North Framingham.
“I am grateful to my colleagues for supporting tax reforms that invest in our communities’
families and in our Commonwealth’s competitiveness,” said Rep. Jack Patrick Lewis, a Democrat from Framingham who represents part of Framingham and all of the Town of Ashland. “The legislative process is one of collaboration and compromise, and this final product is one that seeks to strike an important balance. I am particularly happy to celebrate the progressive tax reforms I had helped lead my colleagues in championing, notably a more equitable distribution of potential future 62F funds, along with increases in the child and dependent tax credit, senior circuit breaker, and rental deduction.”
“This tax relief package will help thousands of residents keep more money in their pockets by providing much needed financial assistance. This package will also help keep the Commonwealth an economically competitive work environment for both businesses and workers,” said Representative Aaron Michlewitz, Chair of the House Committee on Ways & Means (Boston). “I want to thank Speaker Mariano for his leadership, as well as Chair Cusack and the entire membership of the House for their collaboration on this issue.”
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“The overwhelming support of the House of Representatives on this tax relief package speaks to our commitment to making Massachusetts a better place to live, work and invest,” said Representative Mark Cusack, House Chair of the Joint Committee on Revenue (Braintree). “I want to thank Speaker Mariano and Chair Michlewitz for their leadership and our House colleagues for supporting it. Massachusetts is one step closer to being more affordable for our residents and more competitive for businesses and workers.”
“I am particularly pleased that the bill address childcare expenses important to so many families in this area.” said Rep. Kate Donaghue, who is a Democrat from Westborough, and represents one portion of a Precinct in Framingham.
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The bill includes the following tax changes, some with a phased-in implementation method:
Child and Dependent Tax Credit
The bill combines the Child Care Expenses Credit with the Dependent Member of
Household Credit to create one refundable $600 credit per dependent while eliminating
the current cap. This will be phased in over three years, and will be fully implemented in
FY27: taxpayers could claim $310 per dependent in FY24, $455 per dependent in FY25, $600
per dependent in FY26, and $614 per dependent in FY27. This change will cost $165 million
in the first year of implementation and $487 million when fully implemented in year three.
It is expected to impact over 700,000 Massachusetts families.
Estate Tax
Massachusetts is currently a national outlier on the estate tax, as the Commonwealth is
one of only 12 states that impose this tax and has the lowest estate tax exemption threshold
in the country, along with Oregon. The bill increases the estate tax threshold from $1
million to $2 million, and eliminates the “cliff” effect, taxing the value of the estate that
exceeds $2 million, and not the entire estate as the law currently requires. This is expected
to cost $231 million per year.
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Senior Circuit Breaker Tax Credit
This bill doubles the Senior Circuit Breaker Tax Credit from $1,200 to $2,400. This change
is expected to impact over 100,000 taxpayers who own or rent residential property in
Massachusetts as their principal residence. This will cost $60 million per year.
Rental Deduction Cap
This bill increases the rental deduction cap from $3,000 to $4,000. This is expected to
impact about 881,000 Massachusetts taxpayers, and cost $40 million per year.
Short-term Capital Gains Tax
Massachusetts is among the states with the highest short-term capital gains tax rate,
which is currently 12 percent, and taxes short-term capital gains at a higher rate than long-
term capital gains, which are currently taxed at 5 percent. The bill lowers the short-term
capital gains tax rate to 5 percent, and phases in that change over two years. During year
one, short-term capital gains will be taxed at 8 percent, before ultimately reaching 5
percent during year two. This will cost $67 million in year one, and ultimately cost $130
million annually, starting in year three of its implementation.
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Single Sales Factor Apportionment
Currently, most businesses in Massachusetts are subject to a three-factor apportionment
based on location, payroll, and receipts. To make Massachusetts more attractive to multi-
state companies, this bill establishes a single sales factor apportionment in Massachusetts
based solely on receipts, matching what 39 other states currently do. This change is
projected to cost $115 million in year one, and ultimately cost $79 million annually, starting
in year two of its implementation.
Earned Income Tax Credit (EITC)
This bill increases the Earned Income Tax Credit (EITC) from 30 percent to 40 percent of
the federal credit. This is expected to impact about 396,000 taxpayers with incomes under
$57,000, and will cost $91 million.
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In addition to tax relief, the bill changes Chapter 62F of the Massachusetts General Laws, which triggered nearly $3 billion in taxpayer refunds in 2022. This law requires that excess revenue be returned to taxpayers when tax revenue collections in a given fiscal year exceed an annual tax revenue cap. Currently, the credit is applied to the personal income tax liability of all taxpayers on a proportional basis, resulting in higher credits for those who paid more in taxes. The bill passed today adjusts the credit to an equal amount per taxpayer, rather than a rebate based on a percentage of what taxpayers paid the Commonwealth.
The bill also adjusts the Stabilization Fund cap, which currently requires that if the amount remaining in the fund at the end of a fiscal year exceeds 15 percent of the budgeted revenues and other financial resources pertaining to budgeted funds, the excess funds must be transferred to the Tax Reduction Fund, which would then be transferred to taxpayers through one time increases in the personal exemption allowable against income tax liability. The bill adjusts the cap to 25.5 percent, which allows the Commonwealth’s savings account to retain more funding.
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