Massachusetts Democrats deliver tax breaks to all
Tax breaks are coming to all — low-income, middle-class and rich taxpayers alike — in Massachusetts.
- Democratic legislative leaders are set to turn $1 billion of the state's budget surplus into tax relief.
Driving the news: Senate President Karen Spilka and House Speaker Ron Mariano, along with their chief budgetary deputies, announced Monday that they will include major boosts to several tax credits in this year's budget bill.
- A tax break for seniors who own their homes will expand.
- Increased tax credits on earned income will mean savings for lower-income working families.
- Families will receive an expanded credit for money spent on child care or care for dependent family members.
- Tenants will be in line for an additional tax relief based on rent paid to a landlord.
Why it matters: While inflation continues to climb, gas prices stay at near-record levels, and families struggle with food prices and child care, most taxpayers in Massachusetts will pay lower state taxes for this fiscal year.
Context: Legislative leaders didn't offer details on how exactly they would alter the state's tax structure, but the statement from Spilka and Mariano indicates they will use their considerable clout to push the legislation through to Gov. Charlie Baker's desk.
- The memberships of either branch of the legislature rarely buck their party leadership, meaning the tax breaks will almost certainly pass after the two chambers finalize details for the budget.
- Baker had issued a similar plan in his own budget pitch earlier this year, and has urged Democrats to run with the idea.
- As of now, there are no meaningful political obstacles to the tax breaks becoming law.
What they're saying: The tax code changes will "reduce income inequality, make Massachusetts more competitive nationally, and lessen the crippling impact of rising prices, inflation, and economic uncertainty," the lawmakers wrote in their joint statement.
Zoom in: For people with assets over $1 million, the Democrats will alter the estate tax.
- Baker had proposed raising the estate tax ceiling to $2 million.
- Increasing the low end of how much an estate can be worth before the additional estate tax kicks in could have the additional effect of preventing older residents from moving to lower-tax states at the ends of their lives — a goal shared by conservatives and more liberal Democrats from wealthy areas.
The bottom line: Moderates, liberals and conservatives on Beacon Hill seem to be on the same page on offering tax relief at a time when consumers are suffering and the commonwealth is riding high on revenues.
- Democratic leaders announced last week that they would send out $250 rebates to taxpayers who earned between $38,000 and $100,000.
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